Earnings call · Sprouts
Wed Oct 28, Saidwire live coverage archive
https://saidwire.com/archive/earnings-sfm-oct28

STORY (final version)

Sprouts says holiday price cuts are a test run for January pricing overhaul as core shoppers soften
Executives said prior price investments were not deep or broad enough to lift traffic, and the grocer will not guide for 2027 until February.

Sprouts Farmers Market executives said on an earnings call Thursday that earlier price investments failed to lift store traffic enough, prompting them to cut prices now on healthy holiday essentials and prepare a rebuilt national pricing strategy for January. Chief Financial Officer Curtis Valentine said the company hopes an operating profit (EBIT) margin above 5% will be "the floor" for 2027 but is "not ready to guide" for the year, with specifics due in February.

CORE CUSTOMERS START TO SHOW STRAIN
Chief Executive Nick Konat said the less engaged shopper has driven most of the traffic decline, but the core customer is now also pulling back. "We have started to see it a little bit more with our core customer. They're still stronger but we've seen a little bit of softening in their behavior," he said, calling that "one of the key indicators" that the company needed to act now. Konat said core shoppers are buying slightly fewer units and making slightly fewer trips, and that the pressure is not strictly tied to income level.
He cited three pressures: competitors across channels chasing the health and wellness shopper, affordability strain and a macro backdrop that is "not helping." He said customers are migrating to value channels.

HOLIDAY CUTS DOUBLE AS A TEST FOR JANUARY
Executives said the near-term price moves serve two purposes. Konat said the company is putting elements of its rebuilt pricing strategy into markets now "to test and learn," while also cutting prices on holiday essentials that drive transactions. A national rollout is planned for January, which Valentine called the company's "super Bowl" because it is when Sprouts is most top of mind for shoppers.
Konat said the new approach focuses on three areas: more affordable entry points, such as the Sprouts-brand cage-free eggs and raw almonds; "trust builders" such as conventional produce; and key items for the target customer, such as organic grass-fed beef. He said depth will vary by market and that the company is shifting from an item-elasticity model to a customer-and-solution model. Success will be measured by units, transactions and returning customers rather than a fixed price gap to competitors.

MARGIN OUTLOOK AND OFFSETS
Valentine said the 5% EBIT margin figure leaves "a lot of space" between current results and that mark, and that most of the profit impact will come through gross margin. He said the pace and depth of investment will depend on how customers respond. He pointed to self-distribution, retail media, loyalty-program data and vendor partnerships as potential offsets.
Valentine said fourth-quarter margins are seasonally the lowest and that shrink and elevated fuel costs are additional pressures that he does not expect to be indicative of the first three quarters of 2027. He said the cyclospora headwind, called out at 60 basis points in the quarter, peaked around August and early September and has eased but remains a slight drag quarter to date.

NEW STORES STRONG, E-COMMERCE GROWING
Executives said new stores continue to perform well while comparable-store sales at existing stores have weakened. Valentine said the company must "balance" new-store growth, which he called a high-return vehicle, against fixing traffic in core stores, and said slowing unit growth would be considered. E-commerce now accounts for 16% of sales, Konat said, with a larger basket from an omnichannel customer. He said the loyalty program, about a year old, has made progress but is "not as far as we need to be," and that data would be used for personalization, merchandising and retail media. Konat said the company has seen no negative effect from agentic shopping.

BULLETINS
5:23:39 PM ET  SPROUTS CFO: Q4 SHRINK NOT WHERE WE WANT IT, FUEL COSTS REMAIN ELEVATED
5:25:19 PM ET  SPROUTS CFO: SEES GROSS MARGIN REINVESTMENT 'DRAMATIC', NEXT AFFORDABILITY WAVE IN NEAR TERM
5:26:03 PM ET  SPROUTS CEO: WILL WEIGH BALANCING NEW STORE GROWTH AGAINST CORE STORE TRAFFIC NEEDS
5:28:17 PM ET  SPROUTS CEO: AFFORDABILITY EFFORTS SEEN 'SOME FRUIT' BUT NOT ENOUGH TO MOVE STORE TRAFFIC
5:29:45 PM ET  SPROUTS CEO: LESS ENGAGED CUSTOMER BIGGEST DRIVER OF TRAFFIC DECLINE
5:30:21 PM ET  SPROUTS CEO: SOFTENING NOW SEEN IN CORE CUSTOMER BEHAVIOR, WHICH PROMPTED ACTION NOW
5:31:05 PM ET  SPROUTS CFO: NEW STORES CONTINUE TO PERFORM WELL, CORE STORES THE CHALLENGE TO FIX
5:32:33 PM ET  SPROUTS CFO: Q4 ALWAYS LOWEST EBIT MARGIN QUARTER, LOWER SALES, NEW STORE VINTAGE WEIGHT
5:33:17 PM ET  SPROUTS CFO: Q4 2026 EBIT MARGIN WEAKNESS NOT INDICATIVE OF Q1, Q2 OR Q3
5:34:43 PM ET  SPROUTS: REBUILDING PRICING STRATEGY, TESTING IN MARKET NOW, PLANS TO LAUNCH IN JANUARY
5:35:27 PM ET  SPROUTS: GOING DEEPER ON PRICE NOW ON HEALTHY HOLIDAY ESSENTIALS TO DRIVE STORE TRAFFIC
5:37:39 PM ET  SPROUTS CEO: SEES COMPETITION ACROSS CHANNELS CHASING HEALTH AND WELLNESS CUSTOMER
5:38:23 PM ET  SPROUTS CEO: SEEING CUSTOMERS MIGRATE TO VALUE CHANNELS, AFFORDABILITY KEY OPPORTUNITY
5:39:47 PM ET  SPROUTS CFO: COMMITTED TO MAINTAINING EBIT MARGIN ABOVE 5%, GIVES 'A LOT OF ROOM' TO ASSESS
5:40:35 PM ET  SPROUTS CFO: LION'S SHARE OF P&L IMPACT FROM INVESTMENTS WILL COME THROUGH GROSS MARGIN
5:41:59 PM ET  SPROUTS CEO: SHIFTING PRICING FROM ITEM ELASTICITY MODEL TO CUSTOMER AND SOLUTION MODEL
5:43:29 PM ET  SPROUTS CEO: PAST PRICE TESTS NOT BROAD ENOUGH IN ITEM COUNT TO MOVE OVERALL STORE TRAFFIC
5:44:53 PM ET  SPROUTS CFO: 5% EBIT MARGIN IS THE FLOOR HOPED FOR, COULD BE BETTER IF CUSTOMER RESPONDS
5:45:41 PM ET  SPROUTS CFO: NOT READY TO GUIDE 2027 OR COMP; MORE SPECIFIC GUIDANCE COMING IN FEBRUARY
5:47:45 PM ET  SPROUTS CFO: CYCLOSPORA 60 BPS COMP HIT IN Q3, STILL SLIGHT HEADWIND QTD IN Q4 BUT IMPROVING
5:48:29 PM ET  SPROUTS CEO: LOYALTY PROGRAM ABOUT A YEAR IN, PROGRESS MADE BUT 'NOT AS FAR AS WE NEED TO BE'
5:54:07 PM ET  SPROUTS CEO: E-COMMERCE IS 16% OF SALES, STILL RELATIVELY LOW CUSTOMER PENETRATION
5:56:11 PM ET  SPROUTS CEO: HAVE NOT SEEN NEGATIVE IMPACT FROM AGENTIC SHOPPING SO FAR
6:00:53 PM ET  SPROUTS CEO: BETTER PRODUCE PRICING TO LIFT UNIT VELOCITY, FRESHNESS, AND CUSTOMER EXPERIENCE

POSTS (quotes verbatim; each shows when the words were said and when we drafted it)

Sprouts executive on moves to restore customer traffic: "Rather than wait over a longer period of time we're acting with conviction now." He said earlier efforts "wasn't deep enough or broad enough."
  said 5:22:08 PM ET · drafted 5:22:37 PM ET

Sprouts exec said Q4 shrink "isn't where we want it to be" and fuel costs remain elevated, adding the company needs to "take bold action now to take care of the customer," on the Oct. 28 earnings call.
  said 5:22:55 PM ET · drafted 5:23:40 PM ET

Sprouts exec: "We're going to take dramatic action here with the gross margin bit." Answering an analyst, he said the next wave of affordability investments goes in "the very near term" and customer response will pace depth.
  said 5:23:51 PM ET · drafted 5:24:46 PM ET

"Clearly we're going have to think about that," a Sprouts executive said when asked about slowing store growth. He called new stores "a high return vehicle" to be balanced with "other needs of the business."
  said 5:25:23 PM ET · drafted 5:25:53 PM ET

A Sprouts executive said affordability efforts have "seen some fruit," but that response "hasn't been broad enough or deep enough" to move traffic enough. He said the category and item response gives him confidence.
  said 5:26:35 PM ET · drafted 5:26:52 PM ET

Sprouts CEO Nick Ellison, on pricing strategy: "The depth will just depend more, John, on market." He named cage-free eggs and raw almonds as entry points and conventional produce as a trust builder.
  said 5:29:25 PM ET · drafted 5:29:40 PM ET

"We have started to see it a little bit more with our core customer." A Sprouts executive said less-engaged shoppers drove the traffic decline but the core customer is showing "a little bit of softening."
  said 5:29:49 PM ET · drafted 5:30:40 PM ET

Sprouts said Q4 is "always" its lowest quarter. Asked by JPMorgan about margins, an executive said sales are strongest in January and "a little bit softer usually in the holidays."
  said 5:32:09 PM ET · drafted 5:32:31 PM ET

A Sprouts executive said the grocer is rebuilding its pricing strategy and plans to launch it in January, adding: "We are doing things in market right now to test and learn."
  said 5:34:27 PM ET · drafted 5:36:15 PM ET

Sprouts exec says competitors continue to chase health shoppers. "We're seeing customers migrate to value channels, which is another indicator that affordability is a key opportunity for us," the exec said.
  said 5:37:59 PM ET · drafted 5:38:22 PM ET

Sprouts exec Curtis said a 5% EBIT margin commitment "creates a lot of space" for investments. "I think the lion's share of the P and L impact will come through gross margin," he said of affordability spending.
  said 5:39:55 PM ET · drafted 5:40:38 PM ET

"We were at more of an item elasticity model in the past and we're shifting to a customer and solution model," a Sprouts executive said, adding the company will measure results by units and transactions.
  said 5:41:35 PM ET · drafted 5:42:44 PM ET

"We weren't broad enough in the number of items that we needed to focus on."
Sprouts CEO Nick Ellison, on what past pricing tests showed and why the new investment is broader.
  said 5:43:21 PM ET · drafted 5:43:55 PM ET

Sprouts executive on a 2027 margin outlook: Five percent is hoped to be the floor for EBIT margin, but "could it be better than that if the customer really responds," he said on the earnings call Wednesday.
  said 5:44:49 PM ET · drafted 5:44:59 PM ET

Sprouts CEO Nick Ellison said the grocer must "continue to understand our customer better," and that customer data will help unlock more retail media, speaking on marketing changes during its earnings call.
  said 5:46:29 PM ET · drafted 5:47:06 PM ET

Sprouts exec on the cyclospora impact to comps: "We called out the 60 bps in the quarter." It peaked in August and early September, has improved since, and is still a slight headwind quarter to date in Q4.
  said 5:47:09 PM ET · drafted 5:48:20 PM ET

Sprouts CEO Jack Sinclair said the grocer has "just barely cracked the service of it to be honest with you" on using loyalty program data, about a year after launch. He said progress is "not as far as we need to be."
  said 5:48:41 PM ET · drafted 5:50:28 PM ET

Sprouts' CEO said the grocer sees "produce business to me as a key area of opportunity and focus," and named meat as another area where it could differentiate, on an earnings call Wednesday.
  said 5:50:39 PM ET · drafted 5:51:31 PM ET

"This is an area of continued growth because the customer tells us this is how they wanna shop sprouts when they can't make it to our store."
Sprouts CEO Nick Ellison, on e-commerce, now 16% of sales.
  said 5:52:23 PM ET · drafted 5:52:35 PM ET

Sprouts executive on lessons from new stores: "We're actually moving now on looking at some of our more legacy stores and core stores" to refresh the experience there, with tests in the market soon.
  said 5:53:07 PM ET · drafted 5:53:51 PM ET

Sprouts exec Curtis said the grocer's customer-data approach to picking new sites will help "reinvigorate growth in" core stores, which it is reviewing to find those underperforming. Sprouts held its earnings call Oct. 28.
  said 5:54:15 PM ET · drafted 5:54:54 PM ET

"We haven't seen anything to indicate that" AI-driven shopping tools are having a negative impact on the company, a Sprouts executive said on the earnings call Wednesday, responding to an analyst's question.
  said 5:55:07 PM ET · drafted 5:55:56 PM ET

Sprouts executive on produce, citing competition and affordability challenges: "The customer is making choices on what they buy there." Said the company aims to be more balanced across conventional and organic.
  said 5:57:27 PM ET · drafted 5:59:04 PM ET

"Being better on pricing across the board in produce will increase unit velocities," a Sprouts executive said on the earnings call, citing freshness and shrink when units move slowly.
  said 5:59:49 PM ET · drafted 6:00:06 PM ET

TRANSCRIPT (copy-edited; times Eastern)

[5:22:01 PM ET] respond
[5:22:01 PM ET] And respawn, but it wasn't deep enough or broad enough.
[5:22:03 PM ET] to move the customer and move transactions as we need.
[5:22:04 PM ET] but it wasn't deep enough or broad enough
[5:22:06 PM ET] rather than wait over a longer period of time, we're acting.
[5:22:07 PM ET] to move the customer and move transactions as we need
[5:22:08 PM ET] and so rather than wait
[5:22:11 PM ET] acting with conviction now because we believe in the long-term health of the
[5:22:12 PM ET] over a longer period of time we're acting
[5:22:15 PM ET] the model. We're not going to let the customer face.
[5:22:15 PM ET] with conviction now because we believe in the long term health of the model
[5:22:16 PM ET] we're not going to let the customer
[5:22:19 PM ET] away from us when I make moves to get them here. And to get the business back.
[5:22:19 PM ET] fade away from us when it may
[5:22:23 PM ET] business back on track and recognize the potential of the long-term model.
[5:22:23 PM ET] moves to get them here and to get the business back on track and to and recognize the
[5:22:27 PM ET] customer, strong market. Great performance in news.
[5:22:27 PM ET] potential of the long term model with a healthy customer
[5:22:27 PM ET] strong market
[5:22:31 PM ET] stores and additional growth. And Seth, this is Curtis. I just add the other.
[5:22:31 PM ET] great performance in new stores and additional growth
[5:22:35 PM ET] part of Q4 shrinks not where we want to be right now either. So we expect to be.
[5:22:35 PM ET] and seth this is curtis i'd just add i mean the other part of
[5:22:39 PM ET] that to be a tailwind and it's continuing to be a challenge. So, from a year of
[5:22:39 PM ET] q4 shrink is not where we want it to be right now either so we expected that to be a tailwind and the
[5:22:43 PM ET] year perspective, again, Trink isn't where we want it to be. And then obviously, we've got the fuel challenge.
[5:22:43 PM ET] continuing to be a challenge so from a year over year perspective
[5:22:47 PM ET] challenge that continues to be elevated. So, a couple other pieces.
[5:22:47 PM ET] again shrink isn't where we want it to be and then obviously we've got the fuel challenge
[5:22:51 PM ET] within the fourth quarter. But again, so I need to take all.
[5:22:51 PM ET] that continues to be elevated so a couple of other pieces within the fourth quarter
[5:22:55 PM ET] bold action now to take care of the customer and keep.
[5:22:55 PM ET] but again we feel like we need take bold action now to take care of the customer
[5:22:59 PM ET] moving forward with that. Okay, that's helpful. Look, I guess the
[5:22:59 PM ET] and and keep moving forward with that
[5:23:04 PM ET] message is that this is not a one-quarter dynamic, so some of these investments are going to.
[5:23:04 PM ET] okay that's helpful look i guess the message is that this is not a one
[5:23:07 PM ET] wrap into next year. Can you give us some perspective today on what the total?
[5:23:07 PM ET] quarter dynamic so some of these investments are going to wrap into next year
[5:23:11 PM ET] total level of investment should look like, from a gross margin perspective. I guess the
[5:23:11 PM ET] can you give us some perspective today on what the total level of investment
[5:23:15 PM ET] concern would be that your gross margins are still significantly above where a lot.
[5:23:15 PM ET] should look like from a gross margin perspective i guess the concern would be that
[5:23:19 PM ET] lot of other folks in the industry are today. And so, where does that need to get?
[5:23:19 PM ET] your gross margins are still significantly above where a lot
[5:23:19 PM ET] of other folks in the industry are today and so
[5:23:23 PM ET] get reset to? And then, and just the last piece related to that, maybe you could.
[5:23:27 PM ET] could speak to the ways that you can fund that, whether it's through media or vendor funding.
[5:23:27 PM ET] does that need to get reset to and then and just the last piece related to that
[5:23:31 PM ET] funding or supply chain, how should we be thinking about those as potential?
[5:23:31 PM ET] maybe you could speak to the ways that you can fund that whether it's through media or vendor funding
[5:23:35 PM ET] offsets to these investments? Thank you.
[5:23:35 PM ET] or supply chain how should we be thinking about those as potential offsets to these investments
[5:23:35 PM ET] thank you
[5:23:39 PM ET] I think Seth, it's Curtis again. Yeah, so we can put the kind of
[5:23:39 PM ET] yes thanks seth it's curtis again
[5:23:43 PM ET] of 5% in there to help understand what the level.
[5:23:43 PM ET] yes so we put the kind of the five percent in there to help
[5:23:47 PM ET] level could be. Obviously, we're going to take dramatic action here with the
[5:23:47 PM ET] understand what the level could be
[5:23:51 PM ET] the gross margin bit and get the affordability investments.
[5:23:51 PM ET] obviously we're going to take dramatic action here with the gross margin bit and get
[5:23:55 PM ET] in the next wave of those going in the very near term and short term. Well, we'll.
[5:23:55 PM ET] the affordability investments in the next wave of those going in the very near term in short
[5:23:59 PM ET] watch closely is the customer responds to that, and that'll help us pace.
[5:23:59 PM ET] term what we'll watch closely is the customer response to that
[5:24:03 PM ET] the timing and the depth from a gross margin perspective. As you highlighted, we have.
[5:24:03 PM ET] and that will help us pace the timing and the depth from a gross margin perspective
[5:24:07 PM ET] have lots of self-help opportunities we talked about over several quarters.
[5:24:11 PM ET] the things that will be landing here in 2027.
[5:24:11 PM ET] as you highlighted we have lots of self help opportunities we've talked about
[5:24:11 PM ET] over several quarters now the things that will be landing here
[5:24:15 PM ET] that, and beyond. And so, self-distribution, the research.
[5:24:15 PM ET] in twenty twenty seven and beyond and so self distribution
[5:24:19 PM ET] of media, the opportunity with the data from the loyalty program and back.
[5:24:19 PM ET] the retail media the opportunity with the data from the loyalty program
[5:24:23 PM ET] vendor partnership there, all opportunities all still in front.
[5:24:27 PM ET] front of us to go on unlock value in the PL and
[5:24:27 PM ET] and vendor partnership there all opportunities all still in front of
[5:24:31 PM ET] create some offset to the affordability investment. Again, what we
[5:24:31 PM ET] to go unlock value in the p and l and create some offset
[5:24:35 PM ET] we need to understand now is how the customer is going to respond to this next wave.
[5:24:35 PM ET] to the affordability investment again what we need to understand now is how
[5:24:39 PM ET] that'll give us a lot of clarity into February and then 2020.
[5:24:39 PM ET] the customer is going to respond to this next wave and that will give us a lot of clarity
[5:24:43 PM ET] 2027, guys. Okay. All right, thank you both.
[5:24:43 PM ET] into february and into twenty twenty seven guidance
[5:24:47 PM ET] Thank you.
[5:24:51 PM ET] One moment for the next question. Please keep in mind that we are such a limited.
[5:24:51 PM ET] thank you one moment for the next question
[5:24:55 PM ET] limit yourself to one question and one follow-up. Our next question is coming from.
[5:24:55 PM ET] please keep in mind that we ask that you limit yourself to one question and one follow-up
[5:24:59 PM ET] from the line of repetition of Oppenheimer. Please.
[5:24:59 PM ET] our next question is coming from the line of rupesh parikh
[5:25:03 PM ET] go ahead. Good afternoon, and thanks for reteaching my question. So
[5:25:03 PM ET] of oppenheimer please go ahead
[5:25:07 PM ET] first, I guess, on unit growth, as we looked at FY27 beyond, just given some.
[5:25:07 PM ET] good afternoon and thanks for taking my question so first guess
[5:25:11 PM ET] of the challenges in the core business. Has your team think about potentially slow unit growth?
[5:25:11 PM ET] on unit growth as we look to fy twenty twenty seven and beyond just given some of the challenges in the core business
[5:25:15 PM ET] growth to maybe improve or statewise profitability even faster?
[5:25:15 PM ET] how does your team think about potentially slowing unit growth to maybe
[5:25:19 PM ET] faster. Hey, Representative Scurt is.
[5:25:19 PM ET] improve or stabilize profitability even faster
[5:25:23 PM ET] I mean, clearly, we're going to have to think about that as we look ahead. It's going to be a strong part of our story.
[5:25:23 PM ET] hey rupesh it's curtis yes i mean clearly we're going have to think about that as we
[5:25:27 PM ET] story going forward. You know, we continue to be pleased with the new stores.
[5:25:27 PM ET] ahead it's going to be a strong part of our story going forward
[5:25:31 PM ET] as they've opened well. They're comping, you know, in their.
[5:25:31 PM ET] we continue to be pleased with the new stores as they've opened well
[5:25:35 PM ET] year two, three, four, the last few vintages. So you
[5:25:35 PM ET] they're comping in their year two three
[5:25:39 PM ET] it's a high return vehicle for us, but we've got to balance that with the
[5:25:39 PM ET] four the last few vintages so it's a high return vehicle
[5:25:43 PM ET] other needs of the business. We need to balance our investment portfolio to address.
[5:25:43 PM ET] for us but we've got to balance that with the other needs of the business
[5:25:47 PM ET] address traffic and the core store challenges. But we do believe you.
[5:25:47 PM ET] we need to balance our investment portfolio to address
[5:25:51 PM ET] Stores is going to continue to be a strong opportunity for us.
[5:25:51 PM ET] traffic and the core store challenges but we do believe new stores
[5:25:51 PM ET] gonna continue to be
[5:25:51 PM ET] a strong opportunity for us
[5:25:55 PM ET] Right, then my ball question just on traffic. So, as you look at some.
[5:25:59 PM ET] some of the new efforts that you're doing, are you seeing any green chips or does?
[5:25:59 PM ET] great and then my follow-up question just on traffic so as you look at some of the
[5:26:03 PM ET] just the overall confidence you have in actually being able to improve traffic with a new?
[5:26:03 PM ET] the new efforts that you're doing are you seeing any green shoots or just your overall comp
[5:26:03 PM ET] you have in actually being able to
[5:26:07 PM ET] outfits on your way. Yeah, they.
[5:26:07 PM ET] improve traffic with the new efforts underway
[5:26:11 PM ET] for your pastus, Nick. We are. What we've seen is some of our
[5:26:11 PM ET] yes thanks rupesh it's nick
[5:26:15 PM ET] our efforts that we've made across either pricing affordability, investment.
[5:26:15 PM ET] we are what we've seen is some of our efforts that we've made across either
[5:26:19 PM ET] investments or affordable investments in the product side have.
[5:26:19 PM ET] pricing affordability investments or affordability investments in the product side
[5:26:25 PM ET] have seen some fruit, as I mentioned the previous question. It just hasn't been.
[5:26:25 PM ET] have seen some fruit
[5:26:27 PM ET] been enough to move enough traffic to our stores.
[5:26:27 PM ET] as i mentioned in the previous question it just hasn't been enough to move
[5:26:33 PM ET] You've seen really good cat response and item response, but it hasn't been broad enough for deep.
[5:26:33 PM ET] enough traffic to our stores we've seen really good category
[5:26:35 PM ET] deep enough to do so. And that's what gives me confidence that.
[5:26:35 PM ET] and item response but it hasn't been broad enough or deep enough to do so
[5:26:41 PM ET] you know the investment we're making in some of the things that are most important.
[5:26:41 PM ET] and that's what gives me confidence that the investment we're making in
[5:26:43 PM ET] to our customers, that builds trust, that provides access to.
[5:26:43 PM ET] in some of the things that are most important to our customers
[5:26:49 PM ET] to key health categories, and that's the items they care about most is going to.
[5:26:49 PM ET] that builds trust that provides access to key health categories
[5:26:53 PM ET] to continue to drive traffic. I also go back to what I said in.
[5:26:53 PM ET] and that's the items they care about most is going to continue to drive traffic
[5:26:57 PM ET] in the call. You know, we've seen good results of each.
[5:26:57 PM ET] and i i also go back to what i said in the in the call
[5:27:01 PM ET] we've seen good results with e commerce
[5:27:01 PM ET] e-commerce. We've seen strong results with our new stores. And so we know the model and the proposition is very.
[5:27:05 PM ET] very strong. Our customers tell us that COC has continued leading.
[5:27:05 PM ET] we've seen strong results with our new stores and so we know the model and the
[5:27:09 PM ET] into that. And we still have a lot of areas where we can continue to focus on.
[5:27:09 PM ET] is very strong our customers tell us that so you'll see us continue lean into that
[5:27:09 PM ET] and then we still have a lot of areas where we can
[5:27:13 PM ET] on how we win. You know, our innovation is growing in our stores.
[5:27:13 PM ET] continue to focus on how we win
[5:27:17 PM ET] areas we've innovated, continues to show strong growth as it meant.
[5:27:17 PM ET] our innovation is growing in our stores the areas we've innovated continues to show strong growth
[5:27:21 PM ET] really good marks on our store experience, and that will continue to be a key area.
[5:27:21 PM ET] as i mentioned we've got really good marks on our store experience and that will continue to be a key area
[5:27:25 PM ET] E-commerce, Sprouts brand, and then the continued development of loyalty and personalization.
[5:27:29 PM ET] give me a lot of confidence in our ability to continue to grow.
[5:27:29 PM ET] ecommerce sprouts brand and then the continued development
[5:27:29 PM ET] of loyalty and personalization all give me a lot of confidence in our ability to continue to grow
[5:27:33 PM ET] Right, thank you for all the color.
[5:27:37 PM ET] Thank you. One moment, please. And the next question will be.
[5:27:37 PM ET] thank you one moment please
[5:27:41 PM ET] be coming from the line of John, Hanbaco, of Bukit.
[5:27:41 PM ET] and the next question will be coming from the line of john
[5:27:45 PM ET] Time, please go ahead. And to start out to you, when
[5:27:45 PM ET] heinbockel of guggenheim please go ahead
[5:27:49 PM ET] you think about breadth and depth of you didn't go deep enough for broad enough?
[5:27:49 PM ET] nick to start off can you when you think about breadth and depth of
[5:27:53 PM ET] Which I'm not sure both are equally an opportunity.
[5:27:53 PM ET] you didn't go deep enough or broad enough
[5:27:57 PM ET] but you know, where do you see which one is more important?
[5:27:57 PM ET] which i'm not sure both are equally an opportunity but
[5:28:01 PM ET] then I know the unengaged member or the other unengaged customer.
[5:28:01 PM ET] where do you see which one is more important
[5:28:05 PM ET] was not responding. Have you seen weakness spread to?
[5:28:05 PM ET] and then i know the unengaged member or the unengaged customer
[5:28:05 PM ET] was not responding
[5:28:09 PM ET] the more engaged customer.
[5:28:09 PM ET] have you seen weakness spread to the more engaged customer
[5:28:13 PM ET] Yeah, thanks, John. I think as we look at the what we
[5:28:13 PM ET] yes thanks john i think
[5:28:17 PM ET] we've learned, and also, you know, what we're looking at is we rebuild our pricing strategy.
[5:28:17 PM ET] as we look at the what we've learned and also you know what we're
[5:28:21 PM ET] strategy, I think I kind of put it into three buckets when I think.
[5:28:21 PM ET] looking at as we rebuild our pricing strategy i think i kind of put it into three buckets
[5:28:25 PM ET] about bread. Number one is there's an option for.
[5:28:25 PM ET] on when i think about breadth
[5:28:29 PM ET] for us to provide more affordable entry points in the categories, so think about that.
[5:28:29 PM ET] number one is there's an opportunity for us to
[5:28:33 PM ET] that as a really place where Sprout Brand can play. Things like H3A.
[5:28:33 PM ET] provide more affordable entry points in the categories so think about that as a really
[5:28:37 PM ET] eggs or raw almonds and areas where we haven't been as affordable.
[5:28:37 PM ET] place where sprouts brand can play things like cage free eggs or
[5:28:41 PM ET] affordable, entering into some key categories for us. The second
[5:28:41 PM ET] raw almonds in areas where we haven't been as affordable entering in new
[5:28:41 PM ET] some key categories for us
[5:28:45 PM ET] part of the breadth in the strategy is around trust builders.
[5:28:45 PM ET] the second part of the breadth in the strategy is around
[5:28:49 PM ET] those kind of higher frequency, more competitive items. In our case, like
[5:28:49 PM ET] trust builders now those kinda higher frequency more competitive items think
[5:28:53 PM ET] like conventional produce. I think we've got room to be much sharper.
[5:28:53 PM ET] in our case like conventional produce
[5:28:57 PM ET] there. We've done a great job on organic, but that's an area where I see a lot of opportunity for us.
[5:28:57 PM ET] think we've got room to be much sharper there we've done a great job on
[5:29:01 PM ET] for us. And then the third bucket around breadth is the
[5:29:01 PM ET] but that's an area where i see a lot of opportunity for us
[5:29:05 PM ET] I met the target, what we're calling the target customer KVIs. These are the
[5:29:05 PM ET] and then the the third bucket around breadth is the
[5:29:09 PM ET] i met the target we're calling the target customer kbis these are the
[5:29:09 PM ET] the items that drive customer choice in their health.
[5:29:13 PM ET] healthy options and selection. So, think of these as things like organic rest.
[5:29:13 PM ET] the items that drive customer choice in their healthy options and
[5:29:17 PM ET] beef. And that's where I look at the breast and where we're pointing.
[5:29:17 PM ET] selections think of these as things like organic grass fed beef
[5:29:21 PM ET] pointing our pricing strategy. The depth will just depend more.
[5:29:21 PM ET] and that's where i look at the breadth and where we're pointing our pricing strategy
[5:29:25 PM ET] John on Market. And we're going to make sure that we're right by Market and be more.
[5:29:25 PM ET] the depth will just depend more john on market
[5:29:29 PM ET] more focused there. Some were in a good place, and some we have more work to do.
[5:29:29 PM ET] and we're gonna make sure that we're right by market and be more
[5:29:29 PM ET] focused there some we're in a good place and some we have more work to do
[5:29:33 PM ET] The second question on the customer, you're right, the last.
[5:29:37 PM ET] less engaged customer has been the biggest drawing.
[5:29:37 PM ET] the second question on the customer
[5:29:37 PM ET] you're right the less engaged customer has been
[5:29:41 PM ET] driver of our traffic decline, and footsteps into the store.
[5:29:41 PM ET] the biggest driver of our traffic decline and and
[5:29:45 PM ET] store. But to your point, we have started to see it a little bit more with our.
[5:29:45 PM ET] footsteps into the store
[5:29:49 PM ET] our core customer, they're still stronger, but we've seen a little bit of soft.
[5:29:49 PM ET] but to your point we have started to see it a little bit more with our core customer they're still
[5:29:53 PM ET] softening in their behavior, which was one of the key indicators.
[5:29:53 PM ET] stronger but we've seen a little bit of softening
[5:29:53 PM ET] in their behavior which
[5:29:57 PM ET] indicators for me and for us, so we need to take action now.
[5:29:57 PM ET] was one of the key indicators for me and for us that we need to take action now
[5:30:01 PM ET] And then my follow-up real quick, when you think about
[5:30:01 PM ET] and then my follow-up real quick
[5:30:05 PM ET] this, this spread right between new store productivity.
[5:30:05 PM ET] you think about
[5:30:09 PM ET] has remained very, very good. The comps is softened.
[5:30:09 PM ET] this spread right between new store productivity
[5:30:09 PM ET] has remained very very good
[5:30:13 PM ET] you assess that? You know, that increased.
[5:30:13 PM ET] the comps have softened how do you assess that
[5:30:17 PM ET] increasing spread between the two. Usually, they kind of.
[5:30:17 PM ET] that increasing spread between the two
[5:30:21 PM ET] track together at least a little bit.
[5:30:21 PM ET] usually they they kind of track together at least a little bit
[5:30:25 PM ET] Yeah, John, it's currently sight. It is, it's unique.
[5:30:29 PM ET] yes john it's curtis it's unique i think it's
[5:30:29 PM ET] I think it's not what you would expect to see. And that's again the new stores have.
[5:30:33 PM ET] have continued to perform well. We're seeing good response when we open new stores.
[5:30:33 PM ET] it's not what you would expect to see and that's again the new stores have continued to
[5:30:37 PM ET] And so, on the one side, that's positive for us. The new stores are performing.
[5:30:37 PM ET] perform well and we're seeing good response when we open new stores
[5:30:41 PM ET] performing the way that they are, and we haven't seen as much of a challenge.
[5:30:41 PM ET] and so on the one side that's positive for us that the new stores are performing the way
[5:30:45 PM ET] challenge in the new store portfolio. It's the core stores that we've got to do a better job.
[5:30:45 PM ET] that they are and we haven't seen as much of a challenge in the new store portfolio
[5:30:49 PM ET] with. And the things that Nick spoke about there, we're getting after here.
[5:30:49 PM ET] it's the core stores that we've got to do a better job with and
[5:30:53 PM ET] in the very short term, we're really addressing that core star challenge.
[5:30:53 PM ET] things that nick has spoke about there and that we're getting after here
[5:30:57 PM ET] improve the cops. Thank you.
[5:30:57 PM ET] the very short term are really addressing that core store challenge to improve the cost
[5:30:57 PM ET] thank you
[5:31:01 PM ET] Thank you. One moment for the next question.
[5:31:05 PM ET] question.
[5:31:05 PM ET] thank you one moment for the next question
[5:31:09 PM ET] Our next question will be coming from the line.
[5:31:13 PM ET] of Thomas Palmer, of JP Morgan, please go ahead.
[5:31:13 PM ET] our next question will be coming from the line
[5:31:13 PM ET] of thomas palmer of jpmorgan please go ahead
[5:31:17 PM ET] Hey, guys, thanks for the question.
[5:31:21 PM ET] Curtis, if I heard you right, you noted that you expect E-bit margins.
[5:31:21 PM ET] hey guys thanks for the question curtis
[5:31:25 PM ET] if i heard you right you noted that you expect ebit margin
[5:31:25 PM ET] to remain above five percent. The core QA.
[5:31:25 PM ET] to remain above five percent
[5:31:29 PM ET] outlook obviously implies something quite a bit lower. I'm just trying to think about.
[5:31:33 PM ET] about maybe the progression of EBIT margins. Should we?
[5:31:33 PM ET] 4q outlook obviously implies something quite a bit lower i'm just trying to think about
[5:31:37 PM ET] we be thinking about 4Q is kind of the low point for margins.
[5:31:37 PM ET] maybe the progression of ebit margin should we be thinking about
[5:31:41 PM ET] and then you return to this, you know, five percent plus.
[5:31:41 PM ET] 4q is kind of the low point for margins and then you return to this
[5:31:45 PM ET] any color they were given that five percent comment.
[5:31:45 PM ET] five percent plus just any
[5:31:45 PM ET] any color there given that five percent comment
[5:31:49 PM ET] Yeah, it's Q4 is always kind of low.
[5:31:53 PM ET] lowest quarter from that perspective. We're typically, you know, we've got the full weight of the new story.
[5:31:53 PM ET] yes q4 is always
[5:31:57 PM ET] vintage out there. It's a lower sales quarter for us, you know, January.
[5:31:57 PM ET] lowest quarter from that perspective we're typically we've got the full weight of the new store vintage out
[5:32:01 PM ET] January is our super bowl, as we say, and that's our fresh start to the new year.
[5:32:01 PM ET] there it's a lower sales quarter for us january is our
[5:32:05 PM ET] we see our strongest sales in January. And we're a little bit soft.
[5:32:05 PM ET] super bowl as we say and that's our fresh start to the new year and so we see our strongest sales
[5:32:09 PM ET] softer. Usually, in the holidays, where we're left top of mine, maybe for customers.
[5:32:09 PM ET] in january and we're a little bit softer usually in the holidays where we're less
[5:32:13 PM ET] And so that's a typical kind of historical phenomenon. And then within that, you've got.
[5:32:13 PM ET] top of mind maybe for customers and so that's
[5:32:17 PM ET] you've got some of those unique challenges. Last year we saw the business flowing.
[5:32:17 PM ET] that's a typical kind of historical phenomenon and then within that you've got
[5:32:17 PM ET] some of those unique challenges last year
[5:32:21 PM ET] in the third quarter and took some action. Well, forward, some uh
[5:32:21 PM ET] we saw the business slowing in the fourth quarter and took some action pulled forward some
[5:32:26 PM ET] changes from a labor perspective.
[5:32:26 PM ET] some changes from a labor perspective
[5:32:29 PM ET] accelerated some of the investments in that space to try and manage it. Because we've talked about throughout the
[5:32:33 PM ET] quarter, we can kind of work our way through a few quarters at those lower.
[5:32:33 PM ET] accelerated some of the investments in that space to try and manage it
[5:32:33 PM ET] as we talked about throughout the quarter we can kind of work our way through a few quarters
[5:32:37 PM ET] comps, but the longer you go, the more challenging that gets. And so, if you
[5:32:41 PM ET] got our new stores opening up. We've got our investments landing, and the comp just simply isn't where her.
[5:32:41 PM ET] at those lower comps but the longer you go the more challenging that gets
[5:32:41 PM ET] and so we got our new stores opening up we've got a
[5:32:45 PM ET] where we need it to be. So I don't expect that to be indicative of.
[5:32:45 PM ET] investments landing and the comp just simply isn't where we need it to be so i don't
[5:32:45 PM ET] expect that to be indicative of
[5:32:49 PM ET] the shape of Quan or where we're headed. It's a little bit more of a 20.
[5:32:53 PM ET] 2026 Q4 phenomenon. And as I just mentioned, a couple.
[5:32:53 PM ET] of the shape of q1 or where we're headed it's a little bit more of
[5:32:57 PM ET] couple questions ago, you know, shrink is not where we want it to be either, that is higher.
[5:32:57 PM ET] a twenty twenty six q4 phenomenon and as i just mentioned
[5:33:01 PM ET] higher than it should be. Some of that is the sales, and some of that is we got to continue doing.
[5:33:01 PM ET] couple of questions ago shrink is not where we want it to be either
[5:33:01 PM ET] that is higher than it should be some of that is the
[5:33:05 PM ET] do a better job. You know, managing our inventory and our skis and then I.
[5:33:05 PM ET] sales and some of that is we got to continue to do a better job managing our inventory and our
[5:33:09 PM ET] out and all those things. So few different, you know, kind of two.
[5:33:13 PM ET] Q4, 26 specific type phenomena.
[5:33:13 PM ET] skus and in and out and all those things so a few different you know
[5:33:13 PM ET] kind of q four twenty six specific
[5:33:17 PM ET] particularly indicative of where T1 or T2 or T3.
[5:33:17 PM ET] type phenomenon not particularly indicative of
[5:33:17 PM ET] where q1 or q2 or q3 will
[5:33:21 PM ET] Okay, thank you for that. One more.
[5:33:21 PM ET] okay thank you for that
[5:33:25 PM ET] one more follow-up i guess on kind of this 4q versus
[5:33:25 PM ET] more follow-up, I guess, on kind of this 4Q versus 2020.
[5:33:29 PM ET] 2027 dynamic. There was the reference to some planned actions.
[5:33:33 PM ET] really coming in January, but also a mention of some deeper investments.
[5:33:33 PM ET] twenty twenty seven dynamic there was the reference to some planned actions
[5:33:37 PM ET] investments as we think about the holidays, so presumably, kind of.
[5:33:37 PM ET] really coming in january but also mention of some deeper investments
[5:33:41 PM ET] as we think about the holidays so presumably kind of
[5:33:41 PM ET] November to summer. Is that like the experiment time?
[5:33:45 PM ET] time where you kind of over invest in price and see what sticks?
[5:33:45 PM ET] november december is that like the
[5:33:49 PM ET] experiment time where you kinda overinvest in price and and see what
[5:33:49 PM ET] that's where, January, you start to institute more permanent changes.
[5:33:53 PM ET] I mean, what's really, I guess, in mind for this nearer term versus
[5:33:53 PM ET] sticks and that's where january you start to institute
[5:33:53 PM ET] more permanent changes i mean what's really i guess in mind
[5:33:57 PM ET] what comes in January.
[5:33:57 PM ET] this nearer term versus what comes in january
[5:34:01 PM ET] Tom, a couple of things. So, first off, as we as we have mentioned.
[5:34:05 PM ET] yes tom a couple of things so
[5:34:05 PM ET] first off we have mentioned we're rebuilding the pricing
[5:34:05 PM ET] we're rebuilding a pricing strategy and we're putting some of those elements into market.
[5:34:09 PM ET] market now to help us kind of learn, be prepared.
[5:34:09 PM ET] strategy and we're putting some of those elements into market now
[5:34:13 PM ET] prepared for January overall. So we're rebuilding now with the
[5:34:13 PM ET] to help us kind of learn to be prepared for january overall
[5:34:19 PM ET] the input or the belief for the plan, excuse me, too.
[5:34:19 PM ET] so we're rebuilding now with input or the
[5:34:23 PM ET] to launch in Jan. So we are doing things in the market right now.
[5:34:23 PM ET] belief or the plan excuse me to launch in jan
[5:34:27 PM ET] to test and learn. And the other thing I mentioned is we are making action now.
[5:34:27 PM ET] so we are doing things in market right now to test and learn and the other thing i mentioned is
[5:34:31 PM ET] now on items that we know right now drive transactions for our customers.
[5:34:31 PM ET] we are making action now on items that we know right now
[5:34:35 PM ET] on the healthy holiday essentials that matter most. These are
[5:34:35 PM ET] drive transactions for our customer on the healthy holiday essentials that matter most
[5:34:39 PM ET] areas where we can go deeper. Right now, we're a customer.
[5:34:43 PM ET] needs it for the holidays and to help drive more traffic into the
[5:34:43 PM ET] these are areas we can go deeper right now where our customer needs it
[5:34:47 PM ET] the store. As Curtis noted, January is our
[5:34:47 PM ET] for the holidays and to help drive more traffic into the store
[5:34:51 PM ET] you know it's kind of our wind time that's when we're most top of mind for our customers.
[5:34:51 PM ET] as curtis noted january is our
[5:34:55 PM ET] customers. And so that's why I wanted to go national with the strategy.
[5:34:55 PM ET] it's kind of our win time that's when we're most top of mind for our customers
[5:34:59 PM ET] with all the noise and the holidays in November, December, we're using this to get ourselves right.
[5:34:59 PM ET] and so that's why we wanted to to go national with the
[5:34:59 PM ET] strategy with all the noise and the holidays in november december
[5:35:03 PM ET] ready to take care of the customer in January at the same time making move.
[5:35:03 PM ET] we're using this to get ourselves ready to take care of the customer in jan but at the same time making
[5:35:07 PM ET] moves right now to serve them with the things they need most over the holidays.
[5:35:07 PM ET] moves right now to serve them within the things they need most over the holidays
[5:35:11 PM ET] Understood, thank you.
[5:35:11 PM ET] understood thank you
[5:35:15 PM ET] Thank you. One moment to the next question, please.
[5:35:15 PM ET] thank you one moment for the next question please
[5:35:19 PM ET] Our next question will be coming from the line of Mark Hander of UBS. Please go ahead.
[5:35:23 PM ET] ahead. After Newton, thanks so much for taking our question. So, wanted to.
[5:35:23 PM ET] our next question will be coming from the line of mark hender of ubs please go ahead
[5:35:27 PM ET] start with a follow-up on shopper behavior by customer type? Sounds like it's starting to.
[5:35:27 PM ET] good afternoon thanks so much for taking our questions so wanted to
[5:35:31 PM ET] to impact your core customer a bit as well.
[5:35:31 PM ET] start with a follow-up on shopper behavior by customer type it sounds like it's starting to impact
[5:35:35 PM ET] When you think about it from an income cohort perspective, are you seeing pressure?
[5:35:35 PM ET] your core customer a bit as well
[5:35:39 PM ET] pressure across the board? Or has it been more isolated to call it?
[5:35:39 PM ET] you think about it from an income cohort perspective are you seeing
[5:35:39 PM ET] pressure across the board
[5:35:43 PM ET] it the lower third. In other words, our head one's starting to creep up even income chain.
[5:35:43 PM ET] or has it been more isolated to call it
[5:35:47 PM ET] chain. Yeah, hey, Mark, um.
[5:35:47 PM ET] the lower third in other words are headwinds starting to creep up even the income chain
[5:35:51 PM ET] So what we're seeing, you know, we what hasn't changed at all.
[5:35:51 PM ET] yes hey mark
[5:35:55 PM ET] all is that the less engaged customer is still overseeing the biggest leakage.
[5:35:55 PM ET] so what we're seeing what hasn't changed at all is that the less engaged
[5:35:59 PM ET] that's been the case. And within that customer set, there is a
[5:35:59 PM ET] customers still where we're seeing the biggest leakage so that's been the case
[5:36:03 PM ET] a larger impact with slightly lower incomes. We are seeing.
[5:36:03 PM ET] and within that customer set there is a it's a
[5:36:07 PM ET] seeing that. What's changed recently is we've seen a little bit more.
[5:36:07 PM ET] larger impact with slightly lower income so we are seeing that
[5:36:11 PM ET] more of an impact on our core customer. Slightly fewer years.
[5:36:11 PM ET] what's changed recently is we've seen a little bit more of an impact on
[5:36:15 PM ET] units in the basket. A little bit of softening on the trip side.
[5:36:15 PM ET] our core customer slightly fewer units in the vast
[5:36:15 PM ET] a little bit of softening on the trip side
[5:36:19 PM ET] And we see it generally across the board. It's not.
[5:36:19 PM ET] and
[5:36:23 PM ET] strictly based on income level, but we're seeing it overall with the
[5:36:23 PM ET] we see it generally across the board it's not strictly based on income level
[5:36:27 PM ET] customer, which is, as I mentioned earlier, why I decided we need to make a change.
[5:36:27 PM ET] but we're seeing it overall with the customer which is as i mentioned earlier why
[5:36:31 PM ET] change and make a move now to take care of the customer and get the margin set up to allow us to do that.
[5:36:31 PM ET] i decided we need to make a change and make a move now to take care of the customer and get the margin set up to allow us
[5:36:35 PM ET] that. Great thanks. And then on complication, you
[5:36:35 PM ET] to do that
[5:36:39 PM ET] you talked about it accelerating in the space. Are you seeing it?
[5:36:39 PM ET] great and then on competition you talked
[5:36:39 PM ET] it accelerating in the space are you seeing it
[5:36:43 PM ET] both at natural organic focus retailers as well? The conventional players.
[5:36:47 PM ET] you think more customers are shifting their natural organic spend over the
[5:36:47 PM ET] both at natural organic focused retailers as well as at conventional players
[5:36:47 PM ET] do you think
[5:36:51 PM ET] Mass and Conventional just because of where prices are at.
[5:36:51 PM ET] more customers are shifting their natural organic spend over to mass and conventional
[5:36:55 PM ET] even if it's not necessarily something they prefer to do, and how do you?
[5:36:55 PM ET] just because of where prices are at even if it's not necessarily something
[5:36:59 PM ET] you think about best approach for advertising your new strategy?
[5:36:59 PM ET] they prefer to do and how do you think about
[5:37:03 PM ET] strategy and making sure they're aware of what you guys are able to do on that front.
[5:37:03 PM ET] best approach for advertising a new strategy and and making sure they're aware of
[5:37:03 PM ET] of what you guys are able to do on that front
[5:37:07 PM ET] Yeah, I think there's three factors in this.
[5:37:11 PM ET] this that I think all play together. We are seeing.
[5:37:11 PM ET] yeah i i i think there's
[5:37:11 PM ET] 's three factors in this that i think all play together we are seeing
[5:37:15 PM ET] competition across different across a number of channels continue to chase the health.
[5:37:19 PM ET] health wellness customer. But we think validates the opportunity in the
[5:37:19 PM ET] competition across different across a number of channels
[5:37:19 PM ET] continue to chase the health and wellness customer
[5:37:23 PM ET] space that we believe in the long term. So we're not surprised.
[5:37:23 PM ET] which we think validates the opportunity in the space that we believe in the long term
[5:37:27 PM ET] so we're not surprised by that we are seeing it happen
[5:37:27 PM ET] surprised by that. We are seeing it happen. As we've talked about, affordability.
[5:37:31 PM ET] as we've talked about affordability is a challenge for the customers in
[5:37:31 PM ET] space
[5:37:31 PM ET] affordability is a challenge for the customers in this space.
[5:37:35 PM ET] And then the third piece is the macro is not helping, right? I mean, that's only exacerbated.
[5:37:39 PM ET] and then the third piece is the macro is not helping right i think that's only exacerbating making
[5:37:39 PM ET] exacerbating, making it tougher for us, making tough for the customer. So those three things together.
[5:37:43 PM ET] together, I think, are what's impacting the customer.
[5:37:43 PM ET] tougher for us making it tougher for the customers so those three things together
[5:37:43 PM ET] i think are what's impacting the customer
[5:37:47 PM ET] competitive standpoint, you know, I'm not surprised that they're continuing to play.
[5:37:47 PM ET] from a competitive standpoint
[5:37:51 PM ET] play more in this space. I think it's overall. We're seeing customers migrate to Value Chan.
[5:37:51 PM ET] i'm not surprised that they're continuing to play more in this space i think
[5:37:55 PM ET] channels, which is another indicator that affordability is a key option.
[5:37:55 PM ET] overall we're seeing customers migrate to value channels which is another indicator that
[5:37:59 PM ET] opportunity for us. But I feel really good about our ability to win and
[5:37:59 PM ET] affordability is a key opportunity for us
[5:38:03 PM ET] but i feel really good about our ability to win and compete in this environment because
[5:38:03 PM ET] and compete in this environment because our whole model is built to serve.
[5:38:07 PM ET] serve the needs of this unique customer. Not just about just about the item.
[5:38:07 PM ET] our whole model is built to serve
[5:38:11 PM ET] items that some of the other people will carry. And so as I look at our core competency.
[5:38:11 PM ET] the needs of this unique customer not just about just about the items that
[5:38:15 PM ET] competencies of innovating a really fantastic store experience.
[5:38:15 PM ET] some of the other people will carry and so as i look at our our core competencies of
[5:38:19 PM ET] Those are our strongest muscles. We need to flex them faster and stronger to just.
[5:38:19 PM ET] innovating really fantastic store experience those are our
[5:38:23 PM ET] the customer where they are now. And I know we can do that to help.
[5:38:23 PM ET] strongest muscles and we need to flex them faster and stronger
[5:38:23 PM ET] serve the customer where they are now and
[5:38:27 PM ET] help offset any competitive challenges. And as I mentioned right now,
[5:38:27 PM ET] i know we can do that to help offset any competitive
[5:38:31 PM ET] invest in affordability to help the customer remove that as a barrier to come store.
[5:38:31 PM ET] challenges and as i mentioned right now invest in affordability to
[5:38:35 PM ET] stores. Appreciate all the colour. Thanks so much, LeBron, guys.
[5:38:35 PM ET] help the customer remove that as a barrier to come to stores
[5:38:39 PM ET] It's one of you, thank you.
[5:38:39 PM ET] appreciate all the color thanks so much good luck guys
[5:38:43 PM ET] you're new. Telly banana of BMO capital markets, you're.
[5:38:43 PM ET] thanks mara thank you one moment
[5:38:47 PM ET] Sheila is open.
[5:38:47 PM ET] kelly bania of bmo capital markets your line is open
[5:38:51 PM ET] Hi, thanks for taking our question. Um, also.
[5:38:55 PM ET] I just wanted to go back to gross margin here.
[5:38:55 PM ET] hi thanks for taking our question
[5:38:59 PM ET] And two questions. I guess as you look at the fourth quarter, I think you said 90%.
[5:38:59 PM ET] also i just wanted to go back to gross margin here
[5:39:03 PM ET] basis points of V leverage. How much price is in that?
[5:39:03 PM ET] and two questions i guess as you look at the fourth quarter i think you said
[5:39:07 PM ET] you mentioned shrink fuel, I'm guessing some sales to leverage.
[5:39:07 PM ET] ninety basis points of deleverage how much price is in that because you mentioned
[5:39:11 PM ET] shrink fuel i'm guessing some sales deleverage
[5:39:11 PM ET] impact
[5:39:11 PM ET] impact. So, just trying to understand how much price.
[5:39:15 PM ET] just trying to understand how much price is in the fourth quarter and
[5:39:15 PM ET] price is in the fourth quarter, and this comment.
[5:39:19 PM ET] and this comment
[5:39:19 PM ET] comment that you were committed to maintaining EBIT margins above 5%.
[5:39:23 PM ET] I mean, how can you commit to that?
[5:39:23 PM ET] that you are committed to maintaining ebit margins above five percent i mean
[5:39:27 PM ET] how can you commit to that where do we
[5:39:27 PM ET] Where do we're the gross margins?
[5:39:31 PM ET] you think gross margins can settle out here?
[5:39:31 PM ET] do gross margins where do you think gross margins can settle out here
[5:39:35 PM ET] Yeah, HLA it starts yeah the gross marginal goal
[5:39:39 PM ET] go maybe in reverse order. I mean, certainly that 5% creates a lot of space.
[5:39:39 PM ET] hey kelly it's curtis yes
[5:39:39 PM ET] gross margin i'll go maybe in reverse order i mean that
[5:39:43 PM ET] between where we are today and uh you know, and that that market.
[5:39:43 PM ET] that five percent creates a lot of space between where we are today and
[5:39:47 PM ET] mark. So it gives us a lot of room to assess the things that we're going to go.
[5:39:47 PM ET] and that mark so it gives us a lot of room to assess
[5:39:51 PM ET] go do. We're going to make some investments in a gross margin, I think.
[5:39:51 PM ET] the things that we're going to go do we're going to make some investments
[5:39:55 PM ET] lion's share of the PL impact will come through gross margin.
[5:39:55 PM ET] in the gross margin i think the lion's share of
[5:39:59 PM ET] and not affordability investment. The technology and the supply chain activity.
[5:39:59 PM ET] the p and l impact will come through gross margin and that affordability investment
[5:40:03 PM ET] wrote a bit of SDNA, but a lot of capital in that space.
[5:40:03 PM ET] the technology and the supply chain activity give a little bit of sg and a but a lot of capital
[5:40:07 PM ET] and that's some of that's already kind of built into the model more you think about.
[5:40:07 PM ET] in that space so and that's
[5:40:11 PM ET] capital going forward. So those are things that.
[5:40:11 PM ET] of that's already kind of built into the model and the way we think about capital going forward so
[5:40:15 PM ET] we're going to go after and see what the customer response is. Obviously, we're talking about.
[5:40:15 PM ET] those are things that we're going to go after
[5:40:19 PM ET] traffic being priority and traffic first, and we're pairing that with the customer.
[5:40:19 PM ET] and see what the customer response is obviously we're talking about traffic being a priority and traffic
[5:40:23 PM ET] customer, and then we go from there. So, the investments will make here between
[5:40:23 PM ET] first and repairing that with the customer and then we go from there so the investments
[5:40:27 PM ET] holiday activity and the January pricing.
[5:40:27 PM ET] we'll make here between the holiday activity and the january pricing
[5:40:31 PM ET] then we'll see how the customer responds. And then, all those self-help levers we have.
[5:40:35 PM ET] have over time, you know, become optionality for us.
[5:40:35 PM ET] and then we'll see how the customer responds and then all those self help levers we have
[5:40:39 PM ET] continue to go further if we need to. So we feel like we got some space now.
[5:40:39 PM ET] over time become optionality for us to
[5:40:43 PM ET] to do what we need to do. We'll see how the customer responds and we'll get them.
[5:40:43 PM ET] continue to go further if we need to so we feel like we've got
[5:40:43 PM ET] some space now to do what we need to do we'll see how the customer is
[5:40:47 PM ET] in. We'll adjust the pace, you know, and the scale accordingly.
[5:40:47 PM ET] responds and we'll we'll again adjust the pace and scale accordingly
[5:40:51 PM ET] And when you, you know,
[5:40:55 PM ET] see how the customer responds, are you targeting any specific
[5:40:55 PM ET] and when when you you know see
[5:40:59 PM ET] price gap to competition, or do you just?
[5:40:59 PM ET] how the customer responds are you targeting any specific price gap
[5:41:03 PM ET] just kind of monitor it and say, you know, once traffic kind of stable?
[5:41:03 PM ET] to competition or do you just
[5:41:07 PM ET] stabilizes, that's how we'll see how the customer responds if things start to stabilize.
[5:41:07 PM ET] kind of monitor it and say once traffic kind of stabilizes that's
[5:41:11 PM ET] stableize, or do you have a specific price gap in mind?
[5:41:11 PM ET] that's how we'll see how the customer responds if if things start to stabilize
[5:41:15 PM ET] Yeah, he careless neck.
[5:41:15 PM ET] do you have a specific price gap in mind
[5:41:19 PM ET] We do have a more competitive position on our layer.
[5:41:19 PM ET] yes hey kelly it's nick
[5:41:23 PM ET] looking at the strategy by market and by category.
[5:41:23 PM ET] we do have a more competitive position how we're looking at the strategy and
[5:41:23 PM ET] and by market and by category
[5:41:27 PM ET] But most importantly, by the things that are most valued by our customers.
[5:41:31 PM ET] customer on the gaps we want to have. I think if you look at it, we were at more of an item.
[5:41:31 PM ET] but most importantly by the things that are most valued by our customer on the gaap
[5:41:35 PM ET] elasticity model in the past, and we're shifting to a customer and solution model.
[5:41:35 PM ET] we want to have i think if you look at it we were at more of an item
[5:41:39 PM ET] across the product, as I mentioned, think of John's question around the
[5:41:39 PM ET] elasticity model in the past and we're shifting to a customer and solution model against across the products
[5:41:39 PM ET] as i mentioned
[5:41:43 PM ET] the areas of focus for investment around entry points, trust builders.
[5:41:43 PM ET] think in john's question around the
[5:41:47 PM ET] builders, and our key items for target customer. You'll see us invested.
[5:41:47 PM ET] areas of focus for investment around entry points trust builders and our key items
[5:41:51 PM ET] in, and then we'll measure it based on units.
[5:41:51 PM ET] for target customer that you'll see us invest in and then we'll measure it
[5:41:51 PM ET] based on
[5:41:55 PM ET] transactions in the store, and the customer is coming back to our site in the store, and that's.
[5:41:55 PM ET] units transactions in the store and the customers coming back
[5:41:59 PM ET] how we'll measure, and it'll tell us where we're in when we're in the right spot.
[5:41:59 PM ET] to our our site and store and that's how we'll measure and they'll tell us where we're in when we're in the right spot
[5:42:07 PM ET] Thank you, one moment for the next question.
[5:42:07 PM ET] thank you one moment for the next question
[5:42:11 PM ET] The next question will be coming from the line.
[5:42:17 PM ET] Christina Kpe of Dolchibank. Please go ahead.
[5:42:17 PM ET] our next question will be coming from the line of christina katey
[5:42:19 PM ET] ahead. Hi, I'm gonna afternoon, and thanks for taking the questions.
[5:42:19 PM ET] of deutsche bank please go ahead
[5:42:25 PM ET] So, I wanted to follow up on the test, right? You said a strong item and
[5:42:25 PM ET] hi good afternoon and thanks for taking the questions
[5:42:29 PM ET] i wanted to follow-up on the test you've cited strong item and category response
[5:42:29 PM ET] category responses, but this is the words where you tested these actions generally.
[5:42:33 PM ET] generate better total store transactions and frequency where.
[5:42:33 PM ET] but did the stores where you tested these actions generate
[5:42:37 PM ET] better total store transactions and frequency versus the control stores
[5:42:37 PM ET] the control stores. How much of the unit lift was incremental versus cutting.
[5:42:41 PM ET] just how much of the unit lift was incremental versus customers
[5:42:41 PM ET] customers simply shifting purchases to the lower price items.
[5:42:45 PM ET] And then, as you're thinking about the broader price investment.
[5:42:45 PM ET] simply shifting purchases to the lower priced items
[5:42:45 PM ET] and then as you're thinking about the broader
[5:42:49 PM ET] How should we think about how broad that is in terms of what?
[5:42:49 PM ET] price investment just how should we think about
[5:42:53 PM ET] what percentage of the assortment do you realistically need to touch for the consumer.
[5:42:53 PM ET] how broad that is in terms of what percentage of the
[5:42:57 PM ET] consumer to really respond through increased.
[5:42:57 PM ET] assortment do you realistically need to touch for the consumer to really respond
[5:43:01 PM ET] increased trip frequency, um thank you.
[5:43:01 PM ET] through increased
[5:43:01 PM ET] trip frequency thank you
[5:43:05 PM ET] Yeah, hey, Christian is new. I think if you think about
[5:43:05 PM ET] yeah hey christina it's nick i think if you think about
[5:43:09 PM ET] about your second question on where we're going to look at it, think.
[5:43:13 PM ET] I've said, what we learn from the tests that we run in the past is that.
[5:43:13 PM ET] your second question on where we're going look at it
[5:43:17 PM ET] that we weren't broad enough in the number of items that we needed to focus.
[5:43:17 PM ET] i guess i said that what we learned from the tests that we've run-in the past is that
[5:43:21 PM ET] focus on, and it wasn't broad enough to make an impact on the overall.
[5:43:21 PM ET] we weren't broad enough in the number of items that we needed to focus on it wasn't
[5:43:25 PM ET] broad enough to make an impact on the overall customer traffic
[5:43:25 PM ET] overall customer traffic store. We saw movement within, again, item and category, but.
[5:43:29 PM ET] but we didn't see enough to get the customer. Andy.
[5:43:29 PM ET] store we saw movement within again item and category but we didn't see enough
[5:43:33 PM ET] to tell the story, make sure they understood what we were doing, you know, to invest in them.
[5:43:33 PM ET] customer and the ability to
[5:43:37 PM ET] And so that, some of those learnings that we captured is what's informed.
[5:43:37 PM ET] to tell the story and make sure they understood what we were doing to to invest in them and so that
[5:43:41 PM ET] some of those learnings that we've captured is what's informed
[5:43:41 PM ET] as I've mentioned, a broader investment across the business.
[5:43:45 PM ET] You know, as I mentioned earlier, there's a number of key.
[5:43:45 PM ET] as i've mentioned a broader investment across the business
[5:43:45 PM ET] as i mentioned earlier there's a
[5:43:49 PM ET] a number of key areas around entry
[5:43:49 PM ET] key areas around entry, trust, and the key items for our.
[5:43:53 PM ET] target customer that we're investing in. It's a much more substantial part of our.
[5:43:53 PM ET] trust and the key items for our target customer that we're investing in
[5:43:57 PM ET] of our servant than we've done in the past, which is why we
[5:43:57 PM ET] it's a much more substantial part of our
[5:44:01 PM ET] we reflect it in the margin and the guidance we've had.
[5:44:01 PM ET] our sermon than we've done in the past which is why we we reflected in in the margin and the
[5:44:05 PM ET] for you today. Oh, God, I didn't.
[5:44:05 PM ET] the guidance we've had for for you today
[5:44:09 PM ET] just as a follow-up, should we interpret the above 5% E-Bit?
[5:44:09 PM ET] got it and then just as a
[5:44:13 PM ET] merging common as a conservative four. So, likely, the troll four is that.
[5:44:13 PM ET] follow-up should we interpret the above five percent ebit margin
[5:44:13 PM ET] comment as a conservative four
[5:44:17 PM ET] a reasonable planning range for 2027? And what level of comfort.
[5:44:17 PM ET] so likely to trough or is that a reasonable planning range for twenty twenty
[5:44:21 PM ET] comprehension would that also assume? Thank you guys.
[5:44:21 PM ET] seven and what level of comp rate would that also assume
[5:44:21 PM ET] you guys
[5:44:25 PM ET] I'm still asking on living in Car.
[5:44:29 PM ET] maybe. Okay. Yeah, I think right now, Christine.
[5:44:29 PM ET] i missed the last part i think
[5:44:33 PM ET] I think you know, again, five percent, yeah, we would hope that that would.
[5:44:33 PM ET] comp okay yeah i think right now christina i think
[5:44:37 PM ET] would be the floor, and that's the idea. We've got the room.
[5:44:37 PM ET] again five percent yes we would hope that that would be
[5:44:41 PM ET] room now, but we've got to really assess this next wave of activities.
[5:44:41 PM ET] the floor and that's the idea we've got the room now but we've got to really assess
[5:44:45 PM ET] and is it enough? And could it be better than that if the customer really?
[5:44:45 PM ET] this next wave of activities and is it enough and
[5:44:49 PM ET] really responds. That's what we'd hope to see. But we've got to go put those things in.
[5:44:49 PM ET] could it be better than that if the customer really responds that's what we'd hope to see
[5:44:53 PM ET] market. We've got to work our way through the holidays and into the January.
[5:44:53 PM ET] but we've gotta go put those things in market we've gotta work our way through the holidays and into the
[5:44:57 PM ET] time frame and see how the customer responds to that. And so when I ready to guide for 20.
[5:45:01 PM ET] 2027 or you know, speak to the comp as.
[5:45:01 PM ET] the january time frame and see how the customer responds to that and so
[5:45:01 PM ET] we're not ready to guide for twenty twenty seven or
[5:45:05 PM ET] it relates, but that's the idea now is we're investing now.
[5:45:05 PM ET] speak to the comp as it relates but
[5:45:09 PM ET] that's the idea now is we're we're investing now we're gonna see the customer response and then we'll
[5:45:09 PM ET] going to see the customer response, and then we'll have obviously a much more specific.
[5:45:13 PM ET] specific answer in February for guidance for 27 and beyond.
[5:45:13 PM ET] we'll have obviously a much more specific answer in february for
[5:45:17 PM ET] beyond. It's great, that's the luck.
[5:45:17 PM ET] for guidance for twenty seven and beyond
[5:45:17 PM ET] okay that's great best of luck
[5:45:21 PM ET] burning cue. Next question.
[5:45:21 PM ET] thanks thank you
[5:45:25 PM ET] question is coming from the line of Robert Ohms of Bank of America. Please go ahead.
[5:45:25 PM ET] next question is coming from the line of robert ohmes of bank of america
[5:45:29 PM ET] ahead. Oh, hey, guys, two quick follow-ups.
[5:45:29 PM ET] please go ahead
[5:45:33 PM ET] I think my first question is just on what can you give any more follow-up.
[5:45:33 PM ET] hey guys two quick follow ups i think my first question is just
[5:45:37 PM ET] colour on marketing changes you might be making to drive traffic?
[5:45:37 PM ET] on what can you give any more color on marketing changes you might
[5:45:41 PM ET] be making to drive traffic or maybe educate
[5:45:41 PM ET] traffic or maybe educate people about some of the pricing changes you're making.
[5:45:45 PM ET] making. And then the follow-up question I'll give you ahead of time, which is just.
[5:45:45 PM ET] people about some of the pricing changes you're making
[5:45:49 PM ET] cyclospora from here. What kind of a headwind is it to come?
[5:45:49 PM ET] and then the follow-up question i'll give you ahead of time which is just
[5:45:53 PM ET] Thanks.
[5:45:53 PM ET] cyclospora from here what kind of a headwind is it to comps thanks
[5:45:57 PM ET] all. I'll take the first question pass to Curtis on the marketing changes side.
[5:45:57 PM ET] hey robbie it's nick i'll take the first question and pass
[5:46:01 PM ET] side, as I mentioned, January is a key month for us.
[5:46:01 PM ET] to curtis on the marketing changes side
[5:46:05 PM ET] as i mentioned january is a key month for us
[5:46:05 PM ET] us. Both for acquiring new customers and then traffic with existing.
[5:46:09 PM ET] both for acquiring new customers and then
[5:46:09 PM ET] existing customers. And so, as we look at how we go to market in GNA.
[5:46:13 PM ET] January, the affordability investment and the pricing were part.
[5:46:13 PM ET] traffic with existing customers and so as we look at
[5:46:13 PM ET] how do we go to market in january the affordability
[5:46:17 PM ET] of our go-to-market story in the marketing story. We tell as we as.
[5:46:17 PM ET] in the pricing work will be part of our go to market story and the marketing
[5:46:21 PM ET] do so in Q1. And the other thing I would tell you on the marketing story.
[5:46:21 PM ET] story we tell as we do so in q1
[5:46:25 PM ET] set is, you know, one thing that is really clear to me, and you're going to hear a
[5:46:25 PM ET] i think the other thing i would tell you on the marketing side is one thing that
[5:46:29 PM ET] a lot from me in the future. We have got to continue to understand our
[5:46:29 PM ET] that is really clear to me and you're gonna hear a lot from me in the future is
[5:46:33 PM ET] customer better, serve them better, and run our business through that moment.
[5:46:33 PM ET] we have gotta continue to understand our customer better
[5:46:37 PM ET] serve them better run our business through them more and so we are at a
[5:46:37 PM ET] And so we are at a place we can start to unlock more insight from the customer.
[5:46:41 PM ET] daily and capturing, and use that to.
[5:46:41 PM ET] place we can start to unlock more insight from the customer data we've been capturing
[5:46:41 PM ET] and use that to
[5:46:45 PM ET] drive not just the market, even the merchandising product element work we have.
[5:46:49 PM ET] that's an area that you'll see us use that'll unlock media.
[5:46:49 PM ET] drive not just the market even the merchandising product development work
[5:46:49 PM ET] work we have and so that's an area that you'll see us use that will unlock media
[5:46:53 PM ET] unlock more retail media for us. Unlock acquisition, and then certainly certainly.
[5:46:57 PM ET] serve our innovation and foraging work overall. That'll be something that.
[5:46:57 PM ET] unlock more retail media for us unlock acquisition and then certainly serve our innovation
[5:47:01 PM ET] we take advantage of here as we begin 2027.
[5:47:01 PM ET] and forging work overall that'll be something that we
[5:47:01 PM ET] advantage of here as we begin twenty twenty seven
[5:47:05 PM ET] Rabbian, the cyclospora, you know, we call it out the 60 dips in.
[5:47:09 PM ET] the quarter. It kind of peaked for us in that August, early September.
[5:47:09 PM ET] and then ravi on the cyclospora we called out the sixty bps
[5:47:13 PM ET] September time frame, it was a little bit higher than that, and it's gotten you know progressively a little.
[5:47:13 PM ET] in the quarter it kind of peaked for us in that august
[5:47:17 PM ET] early september timeframe it was a little bit higher than that
[5:47:17 PM ET] little bit better since. It's still a slight headwind. As we sit here today, quarter to day.
[5:47:17 PM ET] and it's gotten progressively a little bit better since it's still a slight headwind
[5:47:21 PM ET] date for the fourth quarter, but we are seeing it start to improve.
[5:47:21 PM ET] as we sit here today quarter to date for the fourth quarter
[5:47:21 PM ET] but we are seeing it start to improve
[5:47:25 PM ET] thank you
[5:47:25 PM ET] the hecky.
[5:47:29 PM ET] really want one moment for the next question.
[5:47:33 PM ET] you moment for the next question
[5:47:33 PM ET] our next question is coming from the line of Scott Mark, subjugates. Please.
[5:47:37 PM ET] Please go ahead. Hey, good afternoon, everyone. Thanks for taking our.
[5:47:37 PM ET] and our next question is coming from the line of scott mark
[5:47:37 PM ET] of jefferies please go ahead hey good afternoon everyone thanks for
[5:47:41 PM ET] our questions. First thing I wanted to ask about Nick on the
[5:47:45 PM ET] previous question. You started to touch on data a little bit.
[5:47:45 PM ET] first thing i wanted to ask about nick on the previous
[5:47:49 PM ET] I don't think we've heard as much recently about the loyalty program.
[5:47:49 PM ET] question you started to touch on data a little bit
[5:47:53 PM ET] So, wondering if you can just update us with where you are on.
[5:47:53 PM ET] and i don't think we've heard as much recently about the loyalty program
[5:47:57 PM ET] on that, what kind of engagement you're seeing from the customer.
[5:47:57 PM ET] so wondering if you can just update us with where you are on that what
[5:48:01 PM ET] maybe how you've been leveraging that to this point if you have.
[5:48:01 PM ET] of engagement you're seeing from the customer and maybe how you've been
[5:48:05 PM ET] have.
[5:48:05 PM ET] leveraging that to this point if you have
[5:48:09 PM ET] Scott. So, as I mentioned overall, I mean, the data is going to be a key on.
[5:48:09 PM ET] yes thanks scott so as i mentioned
[5:48:13 PM ET] unlock for us. We are about a year into the launch of the program.
[5:48:13 PM ET] overall mean the data is going to be a key unlock for us we are about a year into
[5:48:17 PM ET] As I look at it, I think we've made progress, but it's not.
[5:48:17 PM ET] launch of the program as i look at it
[5:48:21 PM ET] as far as we need to be. We've been talking about our work invested in.
[5:48:21 PM ET] i think we've made progress but it's not as far as we need to be
[5:48:25 PM ET] invested in that program to drive customer value and kind of.
[5:48:25 PM ET] and we've been talking about our the work we've invested in
[5:48:25 PM ET] that program to drive
[5:48:29 PM ET] customer behavior. We've gotten that, we are now at a place we've.
[5:48:29 PM ET] customer value and customer behavior
[5:48:33 PM ET] we've got a good set of data and talent capabilities to then start to bring.
[5:48:33 PM ET] we've gotten we are now at a place we've got a a good set of data
[5:48:37 PM ET] that into the organization in a bigger way. And we just barely cracked the surface of it to be.
[5:48:37 PM ET] and talent capabilities to then start to bring that into the organization in a bigger way and we just
[5:48:41 PM ET] honest with you. That's why I'm excited about starting to do more of that.
[5:48:41 PM ET] barely cracked the service of it to be honest with you that's why i'm excited about starting to do more of that
[5:48:45 PM ET] moving forward. In understanding customer needs, understanding.
[5:48:49 PM ET] understanding the key solutions and needs that customer customers have.
[5:48:49 PM ET] moving forward and understanding customer needs
[5:48:49 PM ET] understanding the key solutions and need states customers have
[5:48:53 PM ET] look at the business, you know, the importance of items.
[5:48:53 PM ET] they look at the business the
[5:48:57 PM ET] item and attribute is significant, but where the customer is moving is in.
[5:48:57 PM ET] importance of item and attribute is significant but where the customer is moving
[5:49:01 PM ET] how they use those to solve key need states. So I talk about we're going.
[5:49:05 PM ET] going to continue winning gluten free, but we also need to own gut health because that's the solution.
[5:49:05 PM ET] is into how they use those to solve key need states so i talked about we're gonna
[5:49:09 PM ET] where people are going, and we can start to use our data to unlock that.
[5:49:09 PM ET] continue winning gluten free but we also need to own gut health because that's the
[5:49:13 PM ET] she'll see us do that. And I think it's important to remember that for us, our value.
[5:49:13 PM ET] solution is where people are going and we can start to use our data to unlock that
[5:49:17 PM ET] proposition starts with our target customer with healthy innovation.
[5:49:17 PM ET] and so you'll see us do that and i think you know it's important to remember the
[5:49:21 PM ET] for us our value proposition starts with you know
[5:49:21 PM ET] target customer with healthy innovative fresh
[5:49:21 PM ET] innovative, fresh convenient solutions for our customer. And then we have four to.
[5:49:25 PM ET] convenient solutions for our customer and then the affordability piece is gonna be the layer on
[5:49:25 PM ET] affordability piece is going to be the layer on that removes a barrier.
[5:49:29 PM ET] barrier to enjoy and come back to sprouts in the stores they love, and we'll continue.
[5:49:29 PM ET] that removes a barrier
[5:49:29 PM ET] to enjoy and to come back to spouse in the stores they love
[5:49:33 PM ET] continue to go to market in that same way. Appreciate that.
[5:49:33 PM ET] and we'll continue to go to market in that same way
[5:49:37 PM ET] thoughts there, and then maybe just a secondly, you've highlighted a number of.
[5:49:37 PM ET] appreciate the thoughts there and then maybe just just secondly
[5:49:41 PM ET] of areas where you think you need to invest in affordability. One is.
[5:49:41 PM ET] you've highlighted a number of areas where you think
[5:49:45 PM ET] You can just help us understand. Maybe as we look across the partners within the store.
[5:49:45 PM ET] need to invest in affordability wondering if you can just help us understand maybe as we look across
[5:49:49 PM ET] departments within the store maybe what departments have you
[5:49:49 PM ET] store. Maybe what departments have you seen that a
[5:49:53 PM ET] been more challenged versus ones that have been maybe the less.
[5:49:57 PM ET] less impacted by some of these cordability challenges. Thanks.
[5:49:57 PM ET] seen that have been more challenged versus ones that have been
[5:49:57 PM ET] maybe a bit less impacted by some of these affordability challenges
[5:50:03 PM ET] Thanks. Yeah, so a couple of things, I mean, let me start.
[5:50:05 PM ET] start with what's relatively consistent across all categories, and that's where.
[5:50:05 PM ET] yes so a couple of things i think let start with what's
[5:50:09 PM ET] we are distinctive and innovative. But where the customers
[5:50:09 PM ET] relatively consistent across all categories and that's where
[5:50:09 PM ET] we are distinctive and innovative
[5:50:13 PM ET] customer's needs are, that's winning. And we're driving newness in those spaces.
[5:50:13 PM ET] with where the customers' needs are that's winning
[5:50:19 PM ET] spaces, whether that be in Frozen or in Bakery, in Delhi.
[5:50:19 PM ET] and we're driving newness in those spaces whether that be
[5:50:23 PM ET] innovation newness around health convenience, brush.
[5:50:23 PM ET] frozen or in bakery and deli innovation newness around health
[5:50:27 PM ET] freshness, and value is working across all categories. I think where we
[5:50:27 PM ET] convenience freshness and value is working across all categories
[5:50:31 PM ET] we've seen opportunities is in, you know, areas where we have maybe a
[5:50:35 PM ET] little bit more overlap or similar overlap. We think about our produce business to me as a key area.
[5:50:35 PM ET] think where we've seen opportunities is in areas where we have maybe a little bit
[5:50:39 PM ET] of opportunity and focus. Our meat business is one where another area.
[5:50:39 PM ET] overlap or similar overlap we think about our produce business to me as a key area of opportunity and focus
[5:50:43 PM ET] area where we can continue to differentiate when in that space. I think we all.
[5:50:43 PM ET] our meat business is one where another area where
[5:50:47 PM ET] also, that's where I look at meeting the customer where they are from an access.
[5:50:47 PM ET] we could continue to differentiate and win in that space but i think we also that's where i look at
[5:50:51 PM ET] and affordability standpoint is where we have a good amount of opportunity.
[5:50:51 PM ET] meeting the customer where they are from an access and affordability standpoint is where we have a
[5:50:51 PM ET] a good amount of opportunity
[5:50:55 PM ET] thank you what?
[5:50:59 PM ET] moment, please, for the next question. The next question is coming from the line.
[5:51:03 PM ET] line of Grey Mullet of Evercore. Please go ahead.
[5:51:03 PM ET] thank you one moment for the next question
[5:51:03 PM ET] next question is coming from the line of greg melich
[5:51:07 PM ET] Hi, thanks. I wanted to follow up on the e-commerce.
[5:51:07 PM ET] of evercore please go ahead
[5:51:11 PM ET] e-commerce growth of 12%, now 16% of sales and adding shipped on the plan.
[5:51:11 PM ET] hi thanks i wanted to follow-up on the e commerce growth of twelve
[5:51:15 PM ET] platform. Do you maybe describe how that growth is?
[5:51:15 PM ET] now sixteen percent of sales and adding shift onto the platform
[5:51:15 PM ET] you maybe describe how that growth
[5:51:19 PM ET] accelerating, and just what you're seeing in the baskets there.
[5:51:19 PM ET] is accelerating and just what you're seeing in the baskets there
[5:51:23 PM ET] And when you think about the reset of margins, how you want to lean into.
[5:51:27 PM ET] into e-commerce. Next.
[5:51:27 PM ET] and when you think about the reset of margins how you want to lean into e commerce
[5:51:27 PM ET] thanks
[5:51:31 PM ET] I'll start this as Neck on Ecom. You know, we've mentioned.
[5:51:35 PM ET] mentioned this in the past, but I do believe that's a really strong indicator of the strength of our.
[5:51:35 PM ET] yes greg i'll start this is nick on e com
[5:51:39 PM ET] proposition, where we have these items that are harder to find.
[5:51:39 PM ET] we've mentioned this in the past but i do believe it's a really strong indicator of the strength of our
[5:51:39 PM ET] proposition where we have these items that
[5:51:43 PM ET] find in other places. And for customers who can't make the trip to the store, Ecom's a really good.
[5:51:43 PM ET] are harder to find in other places and for customers who can't make the trip to the store
[5:51:47 PM ET] really great opportunity for them. And it continues to be a growth driver, I think, a proof point.
[5:51:51 PM ET] of the strength of our model. On the behavior itself.
[5:51:51 PM ET] comms are really great opportunity for them and it continues to be a growth driver and i think a proof point of
[5:51:51 PM ET] strength of our model
[5:51:55 PM ET] that basket is a bigger basket that customers and omni-channel.
[5:51:55 PM ET] on the behavior itself that basket is a bigger basket
[5:51:59 PM ET] customer. And as I mentioned in the call about the focus on Grow.
[5:51:59 PM ET] that customer is an omnichannel customer and as i mentioned in the call about the
[5:52:03 PM ET] This is an area of a lot of opportunity for us. Well, it's 16%.
[5:52:03 PM ET] focus on grow this is an area of a lot of opportunity for us
[5:52:07 PM ET] of our sales, it's still a relatively low penetration on the number of our customers.
[5:52:07 PM ET] we while at sixteen percent of our sales
[5:52:11 PM ET] customers. And as people become more aware of what we can do in.
[5:52:11 PM ET] it's still relatively low penetration on the number of our customers
[5:52:15 PM ET] e-commerce space. We provide more access with both our own channels.
[5:52:15 PM ET] and as people become more aware of what we can do in in ecommerce space we provide more
[5:52:15 PM ET] access
[5:52:19 PM ET] channel and our partners. I think this is an area of continued growth.
[5:52:19 PM ET] with both our own channel and our partners
[5:52:23 PM ET] growth because the customer tells us this is how they want to shop sprouts when they can't make it.
[5:52:23 PM ET] i think this is an area of continued growth because the customer tells us this is how they
[5:52:27 PM ET] it to our store.
[5:52:27 PM ET] wanna shop sprouts when they can't make it to our store
[5:52:31 PM ET] then a follow-up on he said the the newer stores are just doing better.
[5:52:31 PM ET] got it thanks and then a follow-up on you said the
[5:52:35 PM ET] I guess when you look at those, is there something in the
[5:52:35 PM ET] the newer stores are just doing better i guess when you look at those is there
[5:52:39 PM ET] the store that you're seeing in those, that you're thinking about.
[5:52:39 PM ET] something in the store that you're seeing in those that
[5:52:43 PM ET] about rolling out to the existing chain. Maybe a few things that stand out.
[5:52:43 PM ET] you can you're thinking about rolling out
[5:52:47 PM ET] out. Yeah, I think the
[5:52:47 PM ET] to the existing chain maybe a few things that stand out
[5:52:51 PM ET] you know, I think part of the credit to the news store is we've done a really great job.
[5:52:51 PM ET] yes i think
[5:52:55 PM ET] job with putting those very close to our target customers and the
[5:52:55 PM ET] i think part of the credit to the new stores we've been doing a really great job with
[5:52:59 PM ET] the teams in the stores have done an amazing job. As I mentioned, the call.
[5:52:59 PM ET] putting those very close to our target customers and
[5:53:03 PM ET] call, I think there's an opportunity for us, and we're actually moving now on.
[5:53:03 PM ET] teams in the stores have done an amazing job as i mentioned in the call
[5:53:07 PM ET] looking at some of our more legacy stores and coach doors.
[5:53:07 PM ET] i think there's an opportunity for us and we're actually moving now on
[5:53:11 PM ET] and looking at ways to refresh some of.
[5:53:11 PM ET] looking at some of our more legacy stores and core stores
[5:53:11 PM ET] and looking at ways to
[5:53:15 PM ET] of the experience there and bring together, whether it's more merchandise in the cat.
[5:53:15 PM ET] refresh some of the experience there and bringing together
[5:53:19 PM ET] categories that are working, improved ways to find.
[5:53:19 PM ET] whether it's a more merchandise in the categories that are working
[5:53:23 PM ET] find and discover our innovation and our foraging work.
[5:53:23 PM ET] improved ways to find and discover our innovation and our
[5:53:27 PM ET] ways to highlight freshness in the stores. I think that's an opportunity.
[5:53:27 PM ET] forging work improved ways to highlight freshness in the stores
[5:53:31 PM ET] opportunity for us, and we're starting work there, putting some tests in the market soon.
[5:53:31 PM ET] i think that's an opportunity for us and we're starting to work there and putting some tests in the market soon
[5:53:35 PM ET] So, look at the fleet and the existing fleet, and ensure we keep.
[5:53:39 PM ET] keep up with what we're seeing in the new stores. Yeah, and Greg, I would just add this is.
[5:53:39 PM ET] to look at the fleet and the existing fleet and ensure we keep up with
[5:53:43 PM ET] Curtis. You know, again, the same way that we've reshaped how we pick sites, you know, a lot.
[5:53:43 PM ET] what we're seeing in the new stores and greg i would just add this is curtis
[5:53:47 PM ET] leveraging customer data and understanding the uniqueness across them.
[5:53:47 PM ET] again the same way that we've reshaped how we pick sites
[5:53:51 PM ET] 72 mosaics is an opportunity now, as we look back into the core stores.
[5:53:51 PM ET] leveraging customer data and understanding the uniqueness across
[5:53:55 PM ET] stores and identify the ones that aren't doing as well as us.
[5:53:55 PM ET] seventy two mosaiq is an opportunity now as we look back into the core stores
[5:53:59 PM ET] as others, and you use that same data to really understand.
[5:53:59 PM ET] and identify the ones that aren't doing as well as others
[5:54:03 PM ET] the pockets of the customer that are struggling a little bit, and where we need to do a little bit more.
[5:54:03 PM ET] and you use that same data to really understand
[5:54:07 PM ET] more. And so that's work the time going. We continuously learn, you know.
[5:54:07 PM ET] the pockets of the customer that are that are struggling a little bit and where we need to do a little bit more and so
[5:54:11 PM ET] opening new stores and looking back at our fleet. I think that, you know, leverage in that.
[5:54:11 PM ET] that's work that's ongoing as we continuously learn you know opening new stores and looking back at our
[5:54:15 PM ET] data set the way we have to pick better sites, it will also be something more.
[5:54:15 PM ET] fleet i think that leveraging that data set the way we have
[5:54:19 PM ET] will help us go, you know, reinvigorate growth in the core.
[5:54:19 PM ET] pick better sites will also be something that will help us go
[5:54:23 PM ET] Get out of the good luck.
[5:54:23 PM ET] reinvigorate growth in core
[5:54:23 PM ET] got it well and good luck
[5:54:27 PM ET] surrender thank you. Thank you. One moment, please, for the next question.
[5:54:27 PM ET] thanks chris thank you thank you one moment please for the next
[5:54:31 PM ET] Our next question is coming from the line of Sandra Barton of Melius Research. Please.
[5:54:31 PM ET] question our next question is coming from the line of samuel barton
[5:54:35 PM ET] go ahead. Good afternoon, thanks so much for taking our question.
[5:54:35 PM ET] of melius research please go ahead
[5:54:39 PM ET] I just wanted to follow up on the data and the retail media.
[5:54:39 PM ET] good afternoon thanks so much for taking our question
[5:54:43 PM ET] media. Wondering if you guys had a view on a
[5:54:43 PM ET] i just wanted to follow-up on the data in the retail media
[5:54:47 PM ET] agentic shopping and how it might relate to less human trafficking.
[5:54:47 PM ET] i wonder if you guys had a view on agentic shopping and how it might relate to
[5:54:51 PM ET] traffic through the site. If more shopping is done through an agent.
[5:54:51 PM ET] less human traffic
[5:54:55 PM ET] and just the quality of data as a result.
[5:54:55 PM ET] through the site if more shopping is done through an agent and just
[5:54:55 PM ET] the quality of data
[5:54:55 PM ET] as a result
[5:54:59 PM ET] thanks so much. Yeah, you bet we sort of.
[5:54:59 PM ET] thanks so much
[5:55:03 PM ET] certainly taken a look at it both and what's happening around us and in our space.
[5:55:03 PM ET] you bet we've certainly taken a look at it both in what's happening around us and in our space
[5:55:07 PM ET] space. We haven't said anything to indicate that.
[5:55:07 PM ET] we haven't seen anything to indicate that
[5:55:11 PM ET] Gentic Shopping is having a negative impact on us. Rather, we're looking.
[5:55:15 PM ET] looking at how do we lean on that as a way to continue to.
[5:55:15 PM ET] gendick shopping is having a negative impact on us
[5:55:15 PM ET] rather we're looking at how do we
[5:55:19 PM ET] help customers find unique needs. I think that's where you'll see people.
[5:55:19 PM ET] lean on that as a way to continue to help customers find the unique needs
[5:55:19 PM ET] think that's where you'll see people
[5:55:23 PM ET] in our space use that dropping as to help continue to.
[5:55:23 PM ET] in our space
[5:55:27 PM ET] solve unique states and solutions that were uniquely positioned to deliver.
[5:55:27 PM ET] use that shopping as to help continue to solve the unique states and
[5:55:31 PM ET] deliver. And what we're certainly looking at some things in the comments.
[5:55:31 PM ET] solutions that we're uniquely positioned to deliver
[5:55:35 PM ET] commerce experience right now that can help us stand up and do so.
[5:55:35 PM ET] and we're certainly looking at some things in the commerce
[5:55:39 PM ET] ready to speak about at this point, but I don't believe there's any negative.
[5:55:39 PM ET] experience right now that can help us stand out and do so we're not ready to speak about
[5:55:43 PM ET] negative consequence that we've seen so far from the world of genetic shop.
[5:55:43 PM ET] at this point but i don't believe there's any negative consequence that we've seen so
[5:55:43 PM ET] far from from the world of gen x-ray
[5:55:47 PM ET] I just add as far as data goes, I mean, that you know, it's critical to have your data in the right place.
[5:55:51 PM ET] place as we look ahead to leveraging AI across the business.
[5:55:51 PM ET] and i just add as far as data goes i mean that you know it's critical to have your data in the right
[5:55:51 PM ET] place as we look ahead to
[5:55:55 PM ET] that's you know, we talk about technology investments and you know, modernizing or trying.
[5:55:55 PM ET] leveraging ai you know across the business and so that's you know as we talk about technology investments and
[5:55:59 PM ET] trying to do in the technology space, certainly, data is going to play a big role and you know, make.
[5:55:59 PM ET] modernizing what we're trying to do in the technology space certainly data is going play a big role in
[5:56:03 PM ET] making sure that they have that in the right place, and that'll be a place of investment for us here.
[5:56:07 PM ET] board.
[5:56:07 PM ET] you know making sure that we have that in the right place and that that will be a place of investment for us here going forward
[5:56:11 PM ET] One moment of the next question. Our next question.
[5:56:11 PM ET] one moment for the next question
[5:56:15 PM ET] question is coming from the line of Scott Muskin of R5 Capital.
[5:56:19 PM ET] please go ahead. Hey, guys, sir, thanks for taking my questions.
[5:56:19 PM ET] next question is coming from the line of scott muskin of
[5:56:19 PM ET] r5 capital please go ahead
[5:56:23 PM ET] hey guys thanks for taking my questions i actually had two
[5:56:23 PM ET] Actually it too. I wanted to drill down on.
[5:56:27 PM ET] pricing just a little bit. It seems like when we look at our data,
[5:56:27 PM ET] i wanted to drill down on pricing just a little bit it seems like
[5:56:31 PM ET] the pricing in produce, and I think, Nick, you alluded to this already.
[5:56:31 PM ET] we look at our data that
[5:56:35 PM ET] already. There's some challenges competitively in traditional.
[5:56:35 PM ET] the pricing in produce and i think nick you alluded to this already
[5:56:39 PM ET] traditional or conventional produce. And I was just wondering, as you think about Mars.
[5:56:39 PM ET] there's some challenges competitively in traditional
[5:56:43 PM ET] margins going forward. I'm not sure that's going to go away. And so, as
[5:56:43 PM ET] or conventional produce and i was just wondering as you think about margins going forward
[5:56:43 PM ET] i'm not sure that's going to go away
[5:56:47 PM ET] you reset, do you think you've kind of accounted for that?
[5:56:47 PM ET] and so as you reset do you think you've
[5:56:47 PM ET] kinda accounted for that
[5:56:51 PM ET] And then the second thing about price saying is just as we go through the rest.
[5:56:51 PM ET] and then the second thing about pricing is just
[5:56:55 PM ET] of the store, you know, the affordability with a lot of your stores and more middle income.
[5:56:55 PM ET] as we go through the rest of the store you know the affordability with
[5:56:59 PM ET] middle-income areas. How do we think about those items and the affordability?
[5:56:59 PM ET] lot of your stores in more middle income areas how do we think about those items
[5:57:03 PM ET] affordability there, and what you can do, and then I have a follow-up.
[5:57:03 PM ET] the affordability there and what you can do and then i have a follow-up
[5:57:07 PM ET] Yeah, thanks, Scott. Let me start with.
[5:57:11 PM ET] the produce side. As I mentioned, you know, it goes back to I think.
[5:57:11 PM ET] yeah thanks scott let me start with
[5:57:11 PM ET] on the produce side as i mentioned
[5:57:15 PM ET] what we're seeing in the market. There is intensifying competition, that's one of the spaces.
[5:57:15 PM ET] it goes back to i think what we're seeing in the market there is
[5:57:19 PM ET] in Produce where we are seeing it. And then coupled with the affordability.
[5:57:19 PM ET] competition that's one of the spaces in produce where we are seeing it
[5:57:23 PM ET] affordability challenges in the market in the macro, I think the customer is making choice.
[5:57:23 PM ET] and then coupled with the affordability
[5:57:27 PM ET] choices on what they buy there. I look at produces again.
[5:57:27 PM ET] challenges in the market and the macro i think the customer is making choices on what they buy there
[5:57:31 PM ET] as a business of strength for us. We sell a lot of produce, it's quarter to our.
[5:57:31 PM ET] i look at produces again as a business of strength for us we sell a
[5:57:35 PM ET] who our customer is. It's core to our value proposition. We have a strong.
[5:57:35 PM ET] lot of produce it's core to our who our customer is it's core to our value proposition
[5:57:39 PM ET] capability to source it and find good costs in deals.
[5:57:39 PM ET] we have a strong capability to source it
[5:57:43 PM ET] to pass on to the customer. I think the opportunity for us is how do we.
[5:57:43 PM ET] and find good costs and deals to pass on to the customer
[5:57:47 PM ET] need more balance and how we do that across conventional organic, as I mentioned.
[5:57:47 PM ET] i think the chance the opportunity for us is how do we be more balanced and how we do that across
[5:57:51 PM ET] for us and the right commodities, the right times to do that. And the teams are.
[5:57:51 PM ET] conventional organic as i mentioned for us
[5:57:55 PM ET] working that and putting that in place as we speak. On the affordable.
[5:57:55 PM ET] the right commodities at the right times to do that and the teams are working that and putting that in place
[5:57:55 PM ET] as we speak
[5:57:59 PM ET] affordability side, I'll kind of, I think you were saying, kind of mid-markets, this goes back to any.
[5:57:59 PM ET] on the affordability side i'm kind of i think you were saying kind of mid markets
[5:58:03 PM ET] what we're seeing from our customer: you know, breadth of offer.
[5:58:03 PM ET] this goes back to i think what we're seeing from our customer is
[5:58:03 PM ET] that you know
[5:58:07 PM ET] offering to help these customers who are help enthusiasts that may.
[5:58:07 PM ET] breadth of offering to to help these customers who are
[5:58:13 PM ET] health enthusiasts that may not have the highest incomes
[5:58:13 PM ET] that may not have the highest incomes, giving them affordable entry points as I
[5:58:17 PM ET] I mentioned, like if you want to healthy specialty egg, we have an amazing spread.
[5:58:17 PM ET] giving them affordable entry points as i mentioned like if you wanna have
[5:58:21 PM ET] a healthy specialty egg we have an amazing sprouts brand kg
[5:58:21 PM ET] egg that we need to make sure is affordable every day to get into
[5:58:21 PM ET] brand cage for egg. We need to make sure it's a formal every day to get into.
[5:58:25 PM ET] Yeah, I talked about the conventional protein space and then.
[5:58:29 PM ET] I talked about these target customer items that are most drivers of
[5:58:29 PM ET] yeah i talked about you know the conventional produce space and then
[5:58:29 PM ET] as i talked about these target customer items that are most
[5:58:33 PM ET] of choice for healthy options. Now, that's the third year where whether you're
[5:58:33 PM ET] that are drivers of choice for healthy options
[5:58:37 PM ET] now that's the third area where whether you're a higher middle or low income you're looking for
[5:58:37 PM ET] you're high or middle or low income, you're looking for the healthy options for eyes.
[5:58:41 PM ET] unique customer, we just need to be right every day on that. And that's what one of the issues we're making in a best one.
[5:58:41 PM ET] healthy options for our unique customer we just need to be right every day on that and that's where one of the areas we're making an investment
[5:58:45 PM ET] investment. That's great. And then my second question.
[5:58:49 PM ET] question is around execution and the consistency of that execution.
[5:58:49 PM ET] investment that's great and then my second question is
[5:58:53 PM ET] execution. Particularly in the produce area. So we've seen our
[5:58:53 PM ET] around execution and the consistency of that execution
[5:58:57 PM ET] obviously some of these. But we see it. Some of the math merch.
[5:58:57 PM ET] particularly in the produce area so we've seen obviously some of these moves
[5:59:01 PM ET] merchants, particularly Walmart, have really improved their execution in.
[5:59:01 PM ET] obvious but we see it some of the mass merchants particularly
[5:59:05 PM ET] produce in particular. So, how do you think you guys?
[5:59:05 PM ET] walmart have really improved their execution in
[5:59:09 PM ET] fit into that? We've seen in our store business some inconsistency there.
[5:59:09 PM ET] produce in particular so how do you think you guys
[5:59:13 PM ET] there. So, how do we compete and make sure your execution?
[5:59:13 PM ET] fit into that we've seen in our store business some inconsistency there
[5:59:17 PM ET] execution is where it needs to be in the marketplace.
[5:59:17 PM ET] so how do we how do you compete and make sure you're
[5:59:17 PM ET] execution is where it needs to be in the marketplace
[5:59:21 PM ET] Yeah, they scattered. I think a couple of things. One, our customer.
[5:59:21 PM ET] yes thanks scott
[5:59:21 PM ET] think a couple of things one
[5:59:25 PM ET] customers tell us produce is still a really key reason why they choose us.
[5:59:29 PM ET] us and why they love us. And I think there's always opportunities to improve execution.
[5:59:29 PM ET] our customers tell us produce is still a really key reason why they choose us
[5:59:29 PM ET] and why they love us and
[5:59:33 PM ET] execution, but our customer still tells us that they like our produce.
[5:59:33 PM ET] i think there's always opportunities to improve execution but our customer still tells us that
[5:59:37 PM ET] produce and they like the experience of it. I think, as we mentioned, when we're not moving the
[5:59:37 PM ET] they like our produce and they like the experience of it
[5:59:41 PM ET] the units as fast as we need to, that challenges the model and store on.
[5:59:41 PM ET] i think as we mentioned when we're not moving the the units as fast as we need to that
[5:59:45 PM ET] freshness and on shrink in the customer experience, and that's part of.
[5:59:45 PM ET] challenges the model in store on freshness
[5:59:49 PM ET] and on shrink in the customer experience and that's part of why
[5:59:49 PM ET] of why I think being better on pricing across the board and produce.
[5:59:49 PM ET] think being better on pricing across the board in produce
[5:59:53 PM ET] will increase unit velocities
[5:59:53 PM ET] We'll increase universe, will increase freshness.
[5:59:57 PM ET] freshness. Volume will drive freshness as you know, and I think that's going to help both.
[5:59:57 PM ET] we'll increase freshness volume will drive freshness as you know and
[6:00:01 PM ET] both sales but also the customer experience. And there's some work we continue to do in a store.
[6:00:01 PM ET] think that's gonna help both sales but also the customer experience
[6:00:05 PM ET] sortman to make it easier for our stores to execute. I think we asked a
[6:00:05 PM ET] and there's some work we continue to do in assortment to make it easier for our our stores to execute
[6:00:09 PM ET] lot of them in the differentiation we have. We'll continue to differentiate. I think we need.
[6:00:09 PM ET] i think we ask a lot of them in the differentiation we have we'll continue to differentiate
[6:00:13 PM ET] can get tighter and simpler on how we accumulate producing stores to continue to be the lead.
[6:00:17 PM ET] leader that we are in the produce space.
[6:00:17 PM ET] think we can get tighter and simpler in how we execute produce
[6:00:17 PM ET] stores to continue to be the leader that we are
[6:00:17 PM ET] in the produce space
[6:00:21 PM ET] What if the guys get luck? Appreciate the let me ask.
[6:00:21 PM ET] perfect guys good luck
[6:00:25 PM ET] some questions. Thanks, Duh. Thanks, Duh. And this.
[6:00:25 PM ET] appreciate the let me ask some questions thanks scott
[6:00:29 PM ET] does conclude today's QA session. I would now like to turn the call back over.
[6:00:29 PM ET] thank you and this does conclude today's q and a session
[6:00:33 PM ET] over to Nick only for closing remarks. Please go ahead.
[6:00:33 PM ET] i would now like to turn the call back over to nick koenig for closing remarks
[6:00:33 PM ET] please go ahead
[6:00:37 PM ET] I just want to thank everybody for.
[6:00:41 PM ET] joining us today, their interest in our business, and I look forward to connecting with many of you.
[6:00:41 PM ET] i just want to thank everybody for
[6:00:45 PM ET] of you on our business in the future. Thank you.
[6:00:45 PM ET] joining us today their interest in our business and i look forward to connecting with many of you
[6:00:45 PM ET] on our business in the future thank you
[6:00:49 PM ET] thank you so much for participating in today's programming.
[6:00:49 PM ET] thank you so much for participating in
[6:00:53 PM ET] today's programming you may now disconnect
[6:00:53 PM ET] may now disconnect.
[6:01:37 PM ET] it.
[6:01:53 PM ET] go in the bottom.
[6:02:13 PM ET] Even so, isn't it?

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